UNIVTRSITV  OF  ilUftOIS^UtiriAKV 

APH  ^ 

®1)£  €ommonu)caltl)  of  itla00acl)U0ctts. 


PROCEEDINGS  OF  THE  MASSACHUSETTS 
SPECIAL  COMMISSION  TO  CONSIDER 
THE  FINANCIAL  CONDITION  OF 
THE  BOSTON  ELEVATED 
RAILWAY  COMPANY. 


The  Massachusetts  Special  Commission  to  consider  the 
Financial  Condition  of  the  Boston  Elevated  Railway  Com- 
pany, constituted  under  chapter  158,  Acts  of  1916,  consisted 
of  the  following : — 

The  Lieutenant-Governor,  Honorable  Calvin  Coolidge, 

The  President  of  the  Senate,  Honorable  Henry  G.  Wells, 

The  Speaker  of  the  House,  Honorable  Channing  H.  Cox. 

On  the  part  of  the  Senate : 

Honorable  Sanford  Bates, 

Honorable  Charles  W.  Eldridge. 

On  the  part  of  the  House: 

Victor  F.  Jewett,  Esq., 

Arthur  N.  Newhall,  Esq., 

John  L.  Donovan,  Esq., 

Charles  S.  Lawler,  Esq. 

The  Public  Service  Commission: 

Hon.  Frederick  J.  Macleod, 

Mr.  Everett  E.  Stone, 

Hon.  John  F.  Meaney, 

Mr.  Joseph  B.  Eastman, 

Charles  A.  Russell,  Esq. 

The  Boston  Transit  Commission: 

Hon.  George  F.  Swain,' 

Horace  G.  Allen,  Esq., 

David  A.  Ellis,  Esq., 

Hon.  Josiah  Quincy, 

Mr.  James  B.  Noyes. 


4 BOSTON  ELEVATED  RAILWAY.  [Mar. 

Chapter  158,  Acts  of  1916,  under  which  this  Commission 
is  constituted,  is  as  follows: 

Resolve  providing  for  a Special  Commission  to  consider  the 
Financial  Condition  of  the  Boston  Elevated  Railway 
Company. 

Resolved,  That  the  lieutenant-governor,  the  president  of  the  senate, 
the  speaker  of  the  house  of  representatives,  two  members  of  the  senate 
to  be  appointed  by  the  president,  four  members  of  the  house  to  be 
appointed  by  the  speaker,  and  the  members  of  the  public  service  com- 
mission and  the  Boston  transit  commission  be,  and  hereby  are,  made  a 
commission  to  consider  the  financial  condition  of  the  Boston  Elevated 
Railway  Companj^,  and  what  changes,  if  an}",  should  be  made  in 
, existing  laws  relative  to  that  company  to  enable  it  to  meet  the  reason- 
able demands  of  the  public  for  the  extension  and  improvement  of  its 
system  of  transportation;  also  the  advisability  of  any  changes  in 
subway  rentals,  any  reduction  in  taxes,  and  any  increase  in  fares  or 
changes  in  the  present  transfer  system.  Said  commission  shall  report 
to  the  next  general  court  not  later  than  the  fifteenth  day  of  January 
its  recommendations  for  legislation  relative  to  the  above  matters,  and 
such  further  recommendations  as  in  their  judgment  may  be  necessary 
or  desirable  to  enable  the  company  to  provide  a more  efficient  service 
and  improve  its  credit.  The  lieutenant-governor,  the  president  of  the 
senate,  the  speaker  of  the  house,  and  the  members  of  the  public  service 
commission  and  the  Boston  transit  commission,  shall  receive  no  com- 
pensation for  such  service.  The  other  members  shall  receive  such 
compensation  as  may  be  approved  by  the  governor  and  council,  and 
the  commission  may,  subject  to  like  approval,  incur  necessary  ex- 
penses. [Approved  June  1,  1916. 

Upon  notice  duly  given,  the  first  meeting  of  the  Commis- 
sion was  held  at  the  library  of  the  Public  Service  Commission, 
No.  1 Beacon  Street,  Boston,  Mass.,  at  11.30  a.m.,  on  Friday, 
July  21,  1916. 

Present.  — President  Wells,  Speaker  Cox,  Senator  Eldridge, 
Representatives  Newhall,  Donovan  and  Lawler,  Commission- 
'ers  hlacleod.  Stone,  Meaney,  Eastman,  Russell;  and  Com- 
missioners Swain,  Allen,  Ellis  and  Noyes. 

Absent.  — The  Lieutenant-Governor,  Senator  Bates,  Repre- 
sentative Jewett,  and  Commissioner  Quincy. 

[The  meeting  was  called  to  order  by  President  Wells,  who 
presided  throughout.] 


1917.] 


HOUSE  — No.  1875. 


5 


President  Wells.  I guess  we  are  all  here  that  are  going 
to  be  here  and  I will  say  that  I had  a letter  from  Senator 
Bates,  who  had  to  be  at  the  Isles  of  Shoals  to-day  and  could 
not  be  here. 

My  reason  for  calling  this  meeting  was  on  account  of  a 
letter  which  I received  from  the  Lieutenant-Governor,  which 
letter  also  I think  was  sent  to  the  Speaker  of  the  House  and 
advised  us  to  get  into  conference  together  and  ' with  the 
Public  Service  Commission  and  the  Transit  Commission  and 
have  a meeting  for  purposes  of  organization.  I understand 
that  probably  there  will  not  be  very  much  done  until  at 
least  the  Public  Service  Commission  have  finished  with  the 
Bay  State  fares.  But  it  was  thought  advisable  at  any  rate 
by  the  Lieutenant-Governor  to  have  a meeting  to  organize. 

I assume  that  the  first  item  of  organization  at  least  would 
be  the  nomination  of  a chairman. 

Commissioner  Macleod.  Mr.  Chairman,  I would  move 
that  Lieutenant-Governor  Coolidge  be  elected  chairman  of 
this  joint  committee  or  commission,  whatever  you  may  call  it. 

[The  nomination  was  seconded  by  several  members.] 

President  Wells.  It  is  moved  and  seconded  that  the 
Lieutenant-Governor,  Honorable  Calvin  Coolidge,  serve  as 
chairman  of  this  joint  Commission.  Are  there  other  nomina- 
tions? 

[No  response.] 

[The  question  was  put  and  unanimously  agreed  to.] 

President  Wells.  The  Lieutenant-Governor  in  his  letter 
thought  that  possibly  the  question  of  clerical  assistance  or 
clerkships  could  be  handled  by  the  force  of  the  Public  Service 
Commission  or  the  Transit  Commission.  The  two  boards  are 
here  and  perhaps  they  can  best  state  whether  or  not  that  is  a 
wise  suggestion,  better  than  can  the  members  of  the  Legisla- 
ture. I shall  be  glad  to  hear  from  any  members  relative  to 
the  question  of  permanent  clerk  of  the  Commission  or  ques- 
tion of  clerical  assist/ince. 

Commissioner  Swain.  Mr.  Chairman,  I was  going  to  say 
that  it  seemed  to  me  it  would  be  desirable  to  have  as  secre- 
tary of  the  Commission  one  of  the  members  of  the  Commission, 
and  that  he  should  have  the  clerical  work  done  by  the  force 


G 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


of  either  the  Transit  Commission  or  the  Public  Service  Com- 
mission. And  I would  like  to  nominate  Mr.  Noyes  for  secre- 
tary of  this  Commission. 

'The  nomination  was  seconded. 

President  Wells.  Mr.  Noyes  is  nominated  for  secretary 
of  the  Commission. 

Commissioner  Russell.  I nominate,  Mr.  Chairman,  Mr. 
Charles  E.  Mann,  who  is  the  Executive  Secretary  of  this 
Commission,  and  who  has  had  a good  deal  of  experience  with 
work  of  that  kind  in  connection  with  other  commissions,  I 
am  informed. 

President  Wells.  Mr.  Mann  is  nominated.  Are  there 
any  other  nominations?  Are  there  any  remarks  relative 
thereto? 

Commissioner  Meaney.  Perhaps  the  matter  of  policy 
ought  to  be  determined,  whether  we  want  a member  of  the 
Commission  to  act  in  this  capacity,  — before  any  choice  is 
made. 

President  Wells.  It  would  seem  as  though  the  two  nomi- 
nations were  made  along  perhaps  different  lines  of  thought. 

Commissioner  Meaney.  I think  that  ought  to  be  first 
determined. 

President  Wells.  One  suggestion  as  I understood  it  is 
made  that  a member  of  the  Commission  act  as  clerk  or  secre- 
tary of  the  Commission,  with  the  clerical  force  of  one  Com- 
mission or  the  other  at  his  disposal.  I believe  the  other  nom- 
ination is  made  with  the  idea  that  he  do  all  of  the  work 
apparently,  the  Executive  Secretary  of  the  Public  Service 
Commission  to  act  as  secretary  and  do  the  work  entirely. 

Commissioner  Swain.  Mr.  Chairman,  in  making  my  mo- 
tion I was  guided  largely  by  the  experience  which  we  had 
when  there  was  a large  commission  composed  of  the  old 
Railroad  Commission,  the  Transit  Commission,  the  Harbor 
and  Land  Commission,  and  Metropolitan  Park  Commission, 
considering  the  question  of  transportation,  and  our  organiza- 
tion in  that  case  was  to  elect  one  of  the  members  of  the  com- 
mission as  chairman  and  another  member  as  secretary.  That 
member  of  the  Commission  who  acted  as  secretary  had  all 
the  clerical  assistance  that  he  needed  from  einj)loyees  of  the 
('oininission. 


1917.] 


HOUSE  — No.  1875. 


7 


Commissioner  Russell.  That  is  to  say,  as  I understand 
it,  the  employees  of  the  Commission'  do  the  work  of  the 
secretary  and  all  of  it.  I think  under  all  the  circumstances 
it  is  better  to  have  such  a man  as  secretary  and  let  him  act 
as  such,  and  have  the  honor  of  it  and  any  compensation  as 
secretary. 

Commissioner  Noyes.  Mr.  Chairman,  this  is  quite  em- 
barrassing for  me  and  I think  I will  withdraw  my  name.  I 
think  the  policy  has  been  found  wise  to  have  the  secretary  a 
member  of  the  Commission,  that  is,  to  have  an  organization 
consisting  of  members  of  the  Commission.  I do  not  wish  — 
I think  no  one  nominated  as  a member  of  the  Commission 
would  wish  to  take  aw^ay  any  honor  from  Mr.  Mann,  or  any 
of  the  perquisites  that  may  come.  I know  in  the  case  of 
the  Joint  Commission,  which  consisted  of  the  old  Railroad 
Commission  and  the  Transit  Commission,  that  nearly  all 
clerical  work  was  done  by  the  secretary,  who  was  then  elected, 
and  I do  not  know  what  particular  honor  there  is  to  it.  But 
I am  perfectly  agreeable  to  withdraw  my  name  or  have  the 
Chairman  of  our  board  withdraw  the  nomination. 

President  Wells.  I do  not  understand  that  there  is  extra 
compensation. 

Commissioner  Meaney.  My  suggestion  was  made  with 
the  idea  that  nobody  be  embarrassed,  but  that  the  policy  be 
determined  before  names  w^ere  suggested. 

President  Wells.  Is  there  any  suggestion  on  that  line? 

Speaker  Cox.  I understood  from  the  letter  of  the  Lieu- 
tenant-Governor that  it  was  his  judgment  that  perhaps  the 
clerical  work,  so  called,  would  be  done  by  members  of  the 
Commission  or  by  employees  of  the  Commission.  If  that  is 
so  it  seems  to  me  it  would  be  better  to  have  one  of  our  own 
members  for  secretary,  and  if  it  becomes  necessary  later  to 
get  a clerk,  then  we  should  be  glad  to  consider  Mr.  Mann  or 
any  one  else.  I hope  Mr.  Noyes  will  not  withdraw  his  name. 

Commissioner  Allen.  Just  to  carry  out  the  ideas  of  my 
friend  on  the  left  [Commissioner  Meaney],  I move  that  when 
the  vote  is  taken  for  secretary  it  be  for  a member  of  the 
Commission. 

[The  motion  was  seconded.] 


8 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


President  Wells.  It  is  moved  and  seconded  that  as  a 
matter  of  policy  when  a vote  is  taken  for  secretary  it  be 
taken  for  a member  of  the  Commission.  Are  there  any 
remarks  on  that  motion? 

[The  question  was  put  and  the  motion  was  agreed  to.] 

Commissioner  Swain.  I move  Mr.  Noj^es  be  elected  secre- 
tary of  the  Commission. 

President  Wells.  Mr.  Noyes  is  nominated  for  secretary 
of  the  Commission.  Are  there  any  other  nominations? 

[The  question  was  put  and  the  motion  agreed  to.] 

President  Wells.  Now,  I think  the  questions  of  meetings, 
the  future  meetings  of  this  Commission,  is  to  be  determined 
by  the  members  of  the  Public  Service  Commission  and  the 
Transit  Commission,  as  they  are  considerably  more  busy  with 
hearings  than  possibly  the  members  of  the  Legislature  are. 

Commissioner  Macleod.  Might  I inquire,  Mr.  Chairman, 
whether  the  Lieutenant-Governor  has  not  already  made  some 
requests  of  the  Boston  Elevated  Railway  Company  suggest- 
ing that  they  should  proceed  to  prepare  their  case  in  writing 
for  presentation  to  the  Joint  Commission? 

President  Wells.  I am  very  glad  that  the  Chairman 
brought  that  up.  I neglected  to  state  that  in  this  letter  the 
Lieutenant-Governor  stated  that  he  had  already  taken  the 
initiative  to  this  extent,  that  he  had  asked  the  Elevated  Rail- 
way to  prepare  their  case  and  prepare  it  in  writing,  to  submit 
to  the  individual  commissioners  and  to  all  parties  in  interest, 
and  I presume  possibly  that  if  it  seems  wise  to  this  Commis- 
sion, a vote  to  adjourn  to  the  call  of  the  Chairman  might  be 
in  order. 

Commissioner  Eastman.  Mr.  Chairman,  I wonder  if  it 
would  not  be  possible  to  have  one  or  two  hearings  in  the 
near  future,  in  which  the  Elevated,  at  whose  request  this 
Commission  was  organized,  might  present  its  case,  and  then 
an  adjournment  be  had  until  a later  date.  While  the  Public 
Service  Commission  has  not  any  great  amount  of  time  to 
devote  to  this  matter  at  present,  I think  it  could  sit  for  that 
pur})ose  for  a day  or  two  and  I do  not  imagine  it  would  take 
very  much  more  for  the  Elevated  to  outline  what  it  has  in 
mind,  and  that  would  give  an  opportunity  for  the  community 


1917.] 


HOUSE  — No.  1875. 


9 


to  think  over  what  the  company’s  proposition  is  and  to  pre- 
pare without  loss  of  time  in  the  fall  to  take  that  up. 

President  Wells.  I think  that  was  the  idea  of  the  Chair- 
man, that  the  next  meeting  be  held  as  soon  as  the  Elevated 
has  prepared  its  case.  That  was  the  idea  of  the  Lieutenant- 
Governor,  and  that  is  why  I suggested  that  we  adjourn  to 
the  call  of  the  Chairman,  and  I have  no  doubt  that  the 
Elevated  officials  will  notify  the  Chairman  when  they  are 
ready  with  their  case. 

Commissioner  Eastman.  You  don’t  know  whether  they 
are  ready  or  not. 

President  Wells.  I don’t  know  Whether  they  are  or  not. 

Commissioner  Macleod.  It  seems  to  me  that  if  the  vote 
is  passed  for  an  adjournment  of  this  meeting  until  called  by 
the  Chairman  that  that  will  meet  the  situation  satisfactorily. 
I personally  am  not  of  the  opinion  that  we  shall  be  able  to 
do  very  much  before  the  first  of  September,  for  different 
reasons;  not  only  on  account  of  the  engagements  of  this 
[Public  Service]  Commission,  and  undoubtedly  the  engage- 
ments of  the  Transit  Commission  and  other  members  of  this 
Commission  until  that  date,  but  also  because  it  is  likely,  I 
think,  that  it  will  reqaire  a considerable  period  of  time  for 
the  Boston  Elevated  Railway  Company  to  prepare  its  case, 
as  it  wants  it  presented,  in  view  of  the  fact  that  the  period 
on  which  we  are  now  entering  is  one  during  which  a good 
many  of  the  officials  of  the  company  and  others  are  not  on 
hand,  taking  vacations  and  that  sort  of  thing,  and  it  is 
pretty  difficult  to  get  very  much  interest  or  attention  on  the 
part  of  the  public  during  the  hot  weather,  but  it  may  be 
possible  to  make  some  start  on  the  thing  before  that  date. 

President  Wells.  The  Chair  will  entertain  any  motion  to 
that  effect. 

Commissioner  Macleod.  I move  that  this  meeting  ad- 
journ subject  to  the  call  of  the  Chairman. 

President  Wells.  It  is  moved  and  seconded  that  when 
this  meeting  adjourn,  it  adjourn  subject  to  the  call  of  the 
Chairman.  Any  further  remarks? 

[The  question  was  put  and  the  motion  agreed  to.] 

President  Wells.  Is  there  any  other  business  to  come 
before  the  Commission  at  this  time? 


10 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Speaker  Cox.  Mr.  Pedrick,  the  Sergeant-at-Arms  at  the 
State  House,  asked  me  to  find  out  whether  the  Commission 
desired  to  have  its  meetings  at  the  State  House.  There  are 
several  committees  meeting  there,  and  he  would  like  to  desig- 
nate a room  for  us  if  it  is  desired.  I would  like  to  know  from 
the  members  of  the  Commission  whether  they  think  that  is 
the  best  place  to  have  the  hearings  or  in  the  hearing  room  of 
one  of  the  commissions. 

Commissioner  Macleod.  It  seems  to  me  that  the  hearing 
room  here  wmuld  be  probably  large  enough  to  accommodate 
everybody  who  wants  to  attend.  It  might  be  more  con- 
venient in  keeping  files  and  data  together  to  have  them  here 
at  this  office,  and  members  of  the  Joint  Commission  who 
w’anted  to  consult  them  or  any  other  data  bearing  on  the 
problem  would  get  a better  opportunity  of  considering  them 
here  and  perhaps  easier  access  to  them  here  than  anywhere 
else. 

President  Wells.  You  have  not  any  idea  that  it  would 
interfere  with  any  other  hearing  that  you  might  have  as  a 
Commission? 

Commissioner  Macleod.  I think  not.  We  shall  probably 
not  be  in  permanent  session  all  summer. 

Commissioner  Eastman.  Our  hearing  room  is  not  well 
adapted  to  a large  commission. 

Commissioner  Macleod.  There  is  not  much  room  on  the 
platform.  I had  not  thought  of  that.  Perhaps  that  is  an 
important  objection. 

President  Wells.  I don’t  know  as  it  is  necessary'  to  take 
a vote  on  that,  is  it? 

Speaker  Cox.  No,  I do  not  think  so. 

Commissioner  Macleod.  I think  that  matter  might  be 
left  to  the  Chairman  and  the  secretary  to  arrange. 

Speaker  Cox.  There  is  no  place  in  the  State  House  where 
there  would  be  room  for  all  the  members  of  the  Commission 
to  sit  in  state. 

Commissioner  Eastman.  There  is  more  room  tlian  there 
is  here. 

Speaker  Cox.  Suppose  I ask  the  Sergeant-at-Arms  to 
save  us  the  best  room  available. 


1917.] 


HOUSE  — No.  1875. 


11 


President  Wells.  Yes,  until  he  hears  from  the  Chairman 
and  secretary.  Is  there  any  other  business?  If  not  a motion 
to  adjourn  is  in  order. 

[A  motion  for  adjournment  was  duly  made  and  seconded, 
and  the  question  being  put,  was  agreed  to.] 

Adjourned,  subject  to  the  call  of  the  Chairman. 


12 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


SECOND  DAY. 

First  Public  Hearing. 

Notice  of  Hearing. 

The  Special  Commission  constituted  under  Chapter  158  of  the 
Resolves  of  1916  to  consider  the  financial  condition  of  the  Boston 
Elevated  Railway  Company  will  give  a public  hearing  in  Room  362, 
State  House,  at  10  a.m.,  on  Monday,  September  25,  1916. 

By  order  of  the  Special  Commission. 

James  B.  Noyes,  Secretary. 

Pursuant  to  the  foregoing  notice,  duly  given,  the  Commis- 
sion convened  at  Room  362,  State  House,  Boston,  Massa- 
chusetts, at  10  A.M._,  on  Monday,  September  25,  1916. 

Present.  — The  Lieutenant-Governor,  President  Wells, 
Speaker  Cox,  Senators  Bates  and  Eldridge,  Representatives 
Newhall,  Donovan,  Lawler,  Commissioners  Macleod,  Meaney, 
Eastman  and  Russell,  and  Commissioners  Allen,  Ellis, 
Quincy  and  Noyes. 

Absent.  — Representative  Jewett  and  Commissioners  Stone 
and  Swain. 

Appearances.  — For  the  Boston  Elevated  Railway  Com- 
pany: Messrs.  Gaston,  Snow  & SaltonstaM,  general  solicitors 
[Frederic  E.  Snow,  Esq.,  and  Robert  Holt,  Esq.];  General 
William  A.  Bancroft,  Chairmaji  of  the  Board  of  Directors; 
Matthew  C.  Brush,  President. 

The  Lieutenant-Governor.  We  will  proceed,  gentle- 
men. You  may  present  your  evidence,  IMr.  Snow. 

IMr.  Snow.  Your  Honor,  and  Members  of  the  Commis- 
sion, before  proceeding  I have  here  a printed  set  of  exldbits 
wliicli  I think  it  might  be  desirable  to  distribute  to  members 
of  tlie  Coinmissioji  at  this  time,  so  tliat  they  may  refer  to 
them  from  time  to  time  as  we  go  on. 

[Four  ])ruited  volumes  of  exhibits  ])laced  in  the  hands  of 
members.] 


1917.] 


HOUSE  — No.  1875. 


13 


Statement  of  Frederic  E.  Snow,  Esq.,  Counsel  for  the  Boston 
Elevated  Railway  Company. 

[The  statement  made  by  Mr.  Snow  conforms  to  the  printed 
pamphlet  Statement  of  the  Boston  Elevated  Railway  Com- 
pany,” etc.,  now  in  the  hands  of  the  members  of  the  Com- 
mission, except  with  the  following  interpolations.  Reference 
is  had  to  the  printed  pamphlet  by  page  numbers,  and  the 
additions  made  are  as  follows:] 

[Printed  page  6,  following  line  22:] 

This  map  here  shows  the  location  of  the  five  different  rail- 
roads, in  different  colors.  The  red  is  the  Metropolitan,  the 
black  Cambridge,  the  brown  the  Consolidated  Street  Railway. 
The  other  color,  blue,  I think  is  the  South  Boston,  and  the 
green  is  the  West  End  Stiteet  Railway,  which  had  just  been 
inaugurated  in  1886.  Those  companies  were  all  operated 
independently  of  each  other,  and  the  payment  of  fare  on  one 
street  railway  company  did  not  entitle  the  person  to  ride  on 
the  tracks  of  the  other  companies. 

[Printed  page  7,  following  line  41:] 

And  that  is  the  other  map  over  there  which  shows  the 
present  Boston  Elevated  Railw'ay,  the  red  lines  indicating 
surface  and  the  black  lines  rapid  transit  lines,  either  by  way 
of  subways  or  elevated  structures. 

[Printed  page  8,  following  the  tabulation:] 

You  will  find  at  the  end  of  the  printed  exhibits  some  dia- 
grams showing  the  saving  of  time  on  these  various  routes, 
assuming  a passenger  had  to  reach  his  office  at  8 o’clock  in 
the  morning,  showing  the  time  he  had  to  leave  in  years  gone 
by  and  the  time  he  can  now  safely  leave  and  reach  his  desti- 
nation. 

[Printed  page  16,  following  line  21:] 

Commissioner  Noyes..  May  I interrupt  you?  Is  this  the 
first  public  disclosure  of  your  earnings  statement  up  to 
June  30? 

Mr.  Snow.  Yes.  There  has  been  nothing  public  yet. 

Commissioner  Noyes.  This  is  the  first? 

Mr.  Snow.  Yes. 

[Same  page,  following  line  27:] 


14 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Our  annual  return  is  due  the  30th  of  September,  and  has 
not  yet  been  filed.  I have  here  a copy  of  the  annual  return 
as  we  propose  to  file  it  with  the  Public  Service  Commission. 
I have  only  one  copy,  for  the  reason,  as  I said,  that  some 
slight  changes  will  very  likely  be  made  by  the  accountants 
for  the  Public  Service  Commission.  I have  only  one  copy 
here,  for  the  use  of  the  Commission.  No,  I find  that  it  is  not 
here,  but  is  in  my  office.  I will  give  it  to  the  Commission 
later. 

Commissioner  Noyes.  I think  it  is  interesting  to  know, 
after  your  various  fixed  charges  were  paid,  what  was  left,  if 
anything. 

Mr.  Snow.  This  left  $10,000  and  the  company  failed  by 
$228,000  to  earn  its  dividend  of  6 per  cent. 

Commissioner  Noyes.  This  is  the  interesting  thing. 

[Printed  page  17,  following  line  4:] 

In  other  words,  in  the  preceding  year  the  increase  was  only 
something  like  3,000,000  as  I remember  it,  and  it  varies  from 
year  to  year. 

[Printed  page  20,  following  line  11;] 

Senator  Bates.  Mr.  Snow,  does  that  include  paper  trans- 
fers and  other  transfers? 

Mr.  Snow.  Yes,  the  280,000,000  includes  all  kinds  of 
transfers. 

Senator  Bates.  In  other  words,  that  included  a man  who 
goes  to  Dudley  Street  and  then  in,  through  the  tunnel? 

Mr.  Snow.  Yes. 

Senator  Bates.  You  are  not  arguing  that  he  ought  to  pay 
two  fares? 

Mr.  Snow.  Oh,  no,  but  when  you  consider  the  operating 
costs  it  has  no  bearing  on  the  question  of  whether  the  road 
is  economically  operated. 

[Printed  page  20,  following  line  17-] 

Commissioner  Eastman.  Is  that  for  the  entire  system, 
Mr.  Snow? 

Mr.  Snow.  That  is  for  the  entire  system,  inchiding  ele- 
vated and  subway. 

[Same  page,  following  line  27 :] 

No  comparison  with  the  Bay  State  in  1897  is  made  because 


1917.] 


HOUSE  — No.  1875. 


15 


it  was  formerly  the  Boston  & Northern  and  the  Old  Colony, 
operated  as  distinct  roads. 

[Printed  page  22,  to  follow  the  end  of  the  page:] 

In  other  words,  the  Boston  & Worcester,  the  Berkshire,  the 
Massachusetts  Northeastern,  are  interurban  lines  and  the 
Boston  Elevated  on  its  surface  lines,  according  to  this  table, 
have  the  maximum  speed  per  hour. 

[Printed  page  33,  to  follow  line  20:] 

In  these  exhibits  is  a chart  showing  the  different  require- 
ments of  service  at  different  hours  of  the  day,  showing  that 
at  certain  hours  it  requires  two  or  three  times  the  service 
that  it  does  at  other  times. 

[Printed  • page  34,  to  follow  line  5:] 

Commissioner  Noyes.  Just  a minute,  Mr.  Snow.  What 
is  that  again? 

Mr.  Snow.  Under  the  new  agreement  made  with  the 
Amalgamated  Association,  it  is  estimated  that  the  increased 
wages  will  cost  the  company  $400,000  more  for  the  current 
year,  $600,000  more  for  the  second  year,  and  $800,000  more 
for  the  third  year,  over  what  it  would  have  cost  under  the 
old  rate  of  wages. 

Commissioner  Noyes.  What  is  the  third  year?  The 
present  year? 

Mr.  Snow.  For  the  year  ending  May  1,  1919. 

Commissioner  Noyes.  That  is  pretty  nearly  as  much  as 
your  subway  charge  at  the  present  time. 

Mr.  Snow.  Well,  it  is  a large  amount. 

[Same  page,  to  follow  line  20:] 

The  Lieutenant-Governor.  We  will  take  a recess  of  ten 
minutes. 

Recess  from  11.55  to  12.10. 

[Printed  page  35,  to  follow  line  15.] 

Commissioner  Eastman.  Is  that  charged  under  operating 
expenses? 

Mr.  Snow.  Yes. 

[Printed  page  41,  to  follow  line  31:] 

I ought  to  say  here  that,  prior  to  1894,  the  approval  of 
public  authorities  was  not  required.  But  all  bonds  issued 


16 


BOSTON  ELEVATED  RAILWAY. 


[:Mar. 


prior  to  1894  have  been  refunded  and  replaced  by  other 
bonds  approved  either  by  the  Railroad  Commission  or  the 
Public  Service  Commission. 

[Printed  page  47,  to  follow  line  7:] 

Senator  Bates.  Mr.  Snow,  what  are  the  capital  purposes 
for  which  you  can  use  this  bond  issue? 

Mr.  Snow.  That  is  stated  in  Exhibit  M.  You  will  find  it 
in  the  first  of  Exhibit  M.  The  proceeds  were  available  for 
the  purposes  named  in  the  order  of  the  Public  Service  Com- 
mission dated  November  9,  1915.  The  pages  of  'exhibits  are 
not  numbered,  but  it  is  the  “Statement  of  Unexpended  Cap- 
ital.” And  on  the  next  page  you  will  find  how  much  of  that 
is  left,  and  how  much  for  each  purpose.  For  instance,  the 
Malden  & Everett  will  need  all  of  the  first  item,  and  some 
more  money,  in  addition,  for  the  cost  of  completion.  I think 
from  an  exaihination  of  the  exhibits  you  will  see  just  how 
that  is. 

[Printed  page  48,  to  follow  line  18:] 

There  is  one  chart  here  which  shows  that  rather  graphi- 
cally; this  one  here  which  is  based  on  the  seat  mileage  and 
shows  the  seat  mileage  for  each  passenger  in  1888,  and  what 
it  is  to-day,  in  1916.  It  is  practically  doubled. 

The  Lieutenant-Governor.  If  that  is  a new  topic,  we 
will  take  until  quarter  past  two,  if  that  is  agreeable  to  you, 
Mr.  Snow,  as  a recess. 

Noon  recess,  12.45  to  2.15  t.m. 


Afternoon  Session. 

The  Lieutenant-Governor.  I think  we  will  proceed  now, 
gentlemen. 

Mr.  Snow.  The  amount  of  additional  net  income  required. 

[Printed  page  49  to  follow  line  14:] 

I will  say  that  the  items  furnished  in  that  exliibit  are  based 
upon  information  furnished  by  the  city  officials,  as  to  what 
they  intend  to  do. 

[Printed  page  51,  to  follow  line  10:] 

Commissioner  Noyes.  Mhat  was  that? 


1917.] 


HOUSE  — No.  1875. 


17 


Mr.  Snow.  Temporarily  charging  off  depreciation  against 
premiums  paid  in  on  stock  and  bonds. 

8.  Return  of  the  $500,000  deposited  with  the  State  so  that 

it  will  be  available  for  ordinary  capital  purposes.  ' 

9.  Reimbursement  for  subway  rentals. 

Commissioner  Eastman.  What  was  that? 

Mr.  Snow.  Reimbursement  for  subway  rentals. 

Commissioner  Eastman.  By  whom? 

Mr.  Snow.  By  the  cities  and  towns  which  now  get  the 
taxes  in  the  towns  in  which  we  operate. 

[Printed  page  52,  to  follow  line  21:] 

I should  say  that  about  half  of  those  are  elevated  lines  and 
about  one-half  are  subways. 

[Printed  page  65,  following  line  6:] 

I remember  in  the  old  days,  as  I used  to  go  to  the  theatre, 
I always  used  to  take  a cieck  as  I came  out,  even  if  I did 
not  intend  to  go  back,  and  I always  gave  it  to  the  boys  on 
the  sidewalk.  I think  it  is  very  much  the  same  with  these 
transfers. 

[Same  page,  line  31:] 

This  is  not  for  publication,  but  I got  hold  of  the  head  man 
of  the  Elevated  on  this  transfer  business,  and  I said, 
want  to  get  on  at  Riverbank  Court,  and  I want  to  go  to 
Central  Square,  Cambridge.  I want  you  to  punch  this  for 
me.’’  It  took  him  five  minutes  to  punch  it,  and  then  he  was 
not  sure  that  he  got  it  right.  The  perplexity  of  it  is  due  to 
the  enormous  number  of  transfer  points. 

Senator  Bates.  Don’t  you  invariably  ring  up  the  trans- 
fers and  the  cash  on  separate  registers  now? 

Mr.  Snow.  Yes,  they  are  supposed  to. 

Senator  Bates.  So  that  there  could  not  be  any  confusion 
there  unless  the  conductor  rang  it  up  deliberately? 

Mr.  Snow.  Yes,  unless  he  rang  it  up  deliberately,  but  if 
a conductor  received  a cash  fare  he  could  ring  up  one  on  the 
transfer. 

[Printed  page  67  to  follow  line  21.] 

I will  say  here  that  the  Company  has  asked  the  Boston 
Transit  Commission  to  create  such  a station  at  the  corner 
of  Massachusetts  Avenue  and  Boylston  Street,  and  the  Com- 


18 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


mission  has  expressed  some  doubt  as  to  the  legal  authority  to 
do  it,  and  in  any  event  in  reply  to  the  petition  of  the  road, 
have  written  a letter  tp.  the  company  saying  that  in  their 
opinion  action  on  this  matter  should  be  postponed,  and  that 
the  entire  question  of  prepayment  areas  should  be  laid  before 
the  Special  Commission  organized  under  chapter  158  of  the 
Resolves  of  1915. 

[Printed  page  76,  in  fourth  line  from  the  bottom,  insert:] 

You  will  remember  that  the  revenue  per  car  mile  is  only 
30  cents. 

[Following  the  reading  of  the  statement,  the  following  pro- 
ceedings were  had:] 

I want  to  thank  the  Commission  for  the  attention  they 
have  given  to  this  extremely  tedious  production. 

Commissioner  Eastman.  What  is  Exliibit  S? 

Mr.  Snow.  It  is  the  annual  return  of  which  I am  going  to 
hand  to  the  Chairman  one  copy. 

Commissioner  Allen.  Mr.  Snow',  may  1 ask  one  ques- 
tion? 

Mr.  Snow  . Certainly. 

Commissioner  Allen.  Am  I to  understand  that  the  Ele- 
vated Road  practically  considered  that  the  assumption  by  the 
city  or  State  of  some  of  its  subw^ay  obligations,  speaking 
broadly,  is  the  best  practical  w'ay  of  relief? 

Mr.  Snow'.  We  consider  that  that  is  the  only  possible  w'ay 
unless  the  fares  are  increased. 

Commissioner  Allen.  And  I understand  that  you  give 
preference  to  that,  rather  than  raising  fares? 

Mr.  Snow'.  No,  I do  not  make  that  suggestion.  We 
simply  offer  those  alternatives,  saying  that  in  case  of  in- 
crease of  fare  you  are  making  the  car  rider  pay  the  increase, 
but  if  you  adopt  the  other  method  then  the  community  ]Kiys 
the  increase. 

Commissioner  Allen.  One  of  those  two  methods  is  the 
remedy,  you  think? 

Mr.  Snow'.  Yes. 

(Commissioner  Allen.  And  the  real  relief  has  got  to  come 
through  the  assum])tioji  of  some  of  the  obligations  for  facili- 
ties which  are  not  really  called  for  by  the  present  travel? 


1917.] 


HOUSE  — No.  1875. 


19 


Mr.  Snow.  Yes. 

Commissioner  Eastman.  Has  the  company  no  preference 
between  those  two  methods  of  relief? 

Mr.  Snow.  I should  say  not.  At  least,  it  has  no  prefer- 
ence to  express  at  the  present  time. 

Commissioner  Eastman.  From  the  company’s  point  of 
view,  it  makes  no  difference? 

Mr.  Snow.  That  depends  upon  the  amount  of  business. 
If  the  public  were  to  assume  a portion  of  the  rentals  in  case 
the  revenues  should  be  insufficient,  there  should  still  be  a 
provision  so  that  the  Public  Service  Commission  may  in- 
crease the  fares  sufficiently  to  make  up  the  deficiency.  It  is 
impossible  to  estimate  what  the  situation  will  be  in  the 
future. 

Commissioner  Noyes.  Bringing  out  what  was  suggested 
this  morning,  is  it  a fact!  that  in  your  largely  increased 
gross  for  the  year  1916,  you  gained  practically  no  net? 

Mr.  Snow.  No,  no  net. 

Commissioner  Noyes.  Your  fixed  charges  had  increased 
so  that  there  was  nothing  left? 

Mr.  Snow.  Yes. 

Commissioner  Noyes.  If  this  Commission  were  to  adopt 
or  recommend  the  various  suggestions  for  increasing  revenue 
or  reducing  fixed  charges,  for  instance  the  city  of  Cambridge 
buying  the  Cambridge  subway  or  the  State,  the  return  of 
the  compensation  tax,  the  prepayment  areas  and  one  or  two 
other  features  which  I do  not  recall  at  once,  would  you  then 
be  in  position  for  a number  of  years  to  pay  your  6 per 
cent  on  stock,  bearing  in  mind  your  $800,000  increase  in 
labor  charges  which  is  imminent? 

Mr.  Snow.  The  only  uncertain  question  there  is  the  in- 
crease in  gross. 

Commissioner  Noyes.  Assuming  your  gross  is  so  much. 

Mr.  Snow.  For  instance,  one  year  we  get  an  increase  of 
3,000,000  revenue  passengers,  and  another  year  17.  We 
don’t  know  what  it  will  be.  If  we  had  the  same  increase 
this  year  that  we  had  last,  and  could  be  reimbursed  for  the 
subway  rentals,  I should  expect  that  we  could  pay  6 per  cent 
divideiuls  for  the  current  year.  In  addition  to  the  increase 


20 


ESf  boston  elevated  railway. 


(Mar. 


in  wages  next  year,  we  come  up  against  $440,000  for  the 
Dorchester  tunnel,  and  it  all  depends  there  upon  what  will 
be  the  increase  in  business  in  the  gross,  which  nobody  can 
do  more  than  guess  on.  So  that  we  believe  there  should  be  a 
provision  in  which  the  Public  Service  Commission,  if  these 
other  remedies  are  insufficient,  may  authorize  a sufficient 
increase  in  fares  to  get  6 per  cent. 

Commissioner  Eastman.  Is  the  company  willing  to  sell 
the  Cambridge  subway  at  a stated  cost? 

Mr.  Snow.  I assume  so.  . 

Commissioner  Eastman.  It  cost  about  $12,000,000  to 
build. 

Mr.  Snow.  I think  the  figures  exclusive  of  the  equipment 
are  $10,000,000,  including  Beacon  Hill  tunnel,  which  is 
owned  by  the  city.  I think  the  Elevated  investment  is  a 
trifle  over  $9,000,000. 

Commissioner  Eastman.  How  long  would  that  additional 
capital  take  care  of  the  company? 

Mr.  Snow.  I should  assume  not  over  three  years.  Is  that 
right,  Mr.  Neal? 

Mr.  Neal.  Four  years. 

Mr.*  Snow.  The  general  auditor  says  four  years. 

Commissioner  Macleod.  What  machinery  do  you  sug- 
gest for  carrying  out  any  program  of  that  kind?  I think 
you  suggested  that  such  subways  should  be  taken  over  either 
by  the  metropolitan  district  or  by  the  State.  Would  that  be 
possible  in  the  case  of  the  metropolitan  district,  through 
any  existing  organization  or  commission  of  the  State,  or 
would  it  require  the  establishment  of  some  new  tribunal? 

Mr.  Snow.  I su])pose  it  would  require  the  establishment 
of  some  metro])olitaji  district.  There  is  no  metro]K)litan 
district  which  would  quite  fill  the  bill.  I do  ‘not  want  to 
have  any  feeling  about  commissions  but  I have  always  had 
the  feeling  that  the  Boston  Transit  Commission  is  metro- 
])olitan  now,  rather  than  a Boston  Commission.  But  un- 
doubtedly there  would  have  to  be  a new  metropolitan  dis- 
trict created. 

('ommissioner  Eastman.  Have  you  drafted  any  new  bills 
to  carry  this  into  effect? 


1917.] 


HOUSE  — No.  1875. 


21 


Mr.  Snow.  No,  I have  not. 

Commissioner  Allen.  Assuming  that  the  obligations  of 
the  subway  should  be  assumed  by  the  State  or  by  the  cities, 
have  you  considered  the  question  whether  there  would  be 
any  legal  objection  to  such  a change? 

Mr.  Snow.  Yes,  I have. 

Commissioner  Allen.  Are  you  satisfied  that  it  could  be 
legally  done? 

Mr.  Snow.  I cannot  see  any  difficulty  about  that.  In 
the  first  place  the  cities  could  have  built  these  subways 
and  leased  them  to  us  without  rental,  if  they  saw  fit.  There 
is  no  obligation,  and  they  could  let  us  have  the  use  of  the 
subways  the  same  as  they  do  the  streets.  It  is  simply  an- 
other highway,  and  they  might  have  done  that  in  the  be- 
ginning. 

Commissioner  Allen.  But  not  having  done  that,  and  the 
bonds  issued,  and  the  rentals  pledged  to  the  payment  of  the 
bonds,  whether  the  bondholders  would  not  object? 

Mr.  Snow.  I don’t  see  how  the  bondholders  could  object 
so  long  as  we  pay  the  rentals.  They  might  object  to  their 
being  abolished,  but  they  would  still  have  the  obligation  of 
the  Elevated  and  the  city. 

Commissioner  Allen.  I thought  your  idea  was  to  relieve 
the  Elevated  from  the  obligation? 

Mr.  Snow.  My  theory  was  that  the  Elevated  would  still 
continue  to  pay  the  rentals  under  the  leases,  and  then  having 
paid  it  at  the  end  of  the  year,  the  State  and  city  would  re- 
imburse them  out  of  the  franchise  and  compensation  tax. 

Commissioner  Allen.  And  thereby  decrease  the  amount 
which  would  be  received  by  the  different  cities  and  towns  in 
the  metropolitan  district  from  such  taxes? 

Mr.  Snow.  Yes. 

Commissioner  Noyes.  Mr.  Snow,  as  a practical  question 
on  this  Dorchester  tunnel  which  certainly  looms  up  as  a 
great  burden  when  finished  and  acce])ted  by  you,  is  tfiere 
any  way  that  for  a series  of  years  the  rental  charge  could  be 
put  on  the  capital  account,  always  realizing  that  the  bonds 
were  sold  under  certain  conditions?  Is  that  practicable? 
In  various  power  companies  and  big  undertakings  through 


22 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


the  United  States  the  interest  charges  during  construction 
and  for  a period  of  years  are  often  put  on  the  capital  ac- 
count. Is  there  some  practical  way  that  that  could  be  done, 
so  that  the  communities  would  not  suffer  and  the  bond- 
holders would  be  protected? 

Mr.  Snow.  Of  course  if  that  should  be  done,  I have  not 
the  slightest  idea  that  any  bondholder  or  anybody  else 
would  raise  any  objection  because  they  still  have  the  city  be- 
hind their  bonds.  If  you  go  and  ask  for  their  consent,  you 
could  not  get  it,  and  as  to  whether  it  could  be  done  in  case 
they  protested  is  another  question.  We  have  executed  a 
lease  of  the  Dorchester  tunnel  which  stipulates  precisely 
when  the  rentals  will  commence,  and  we  have  to  commence 
paying  at  that  time.  The  bonds  have  been  issued,  presum- 
ably on  the  strength  of  that  lease. 

Now,  to  add  interest  to  the  construction  would  be  chang- 
ing the  terms  of  that  lease.  I do  not  suppose  any  bond- 
holder would  object  if  that  was  done,  but  I do  not  suppose 
they  would  consent  to  it.  They  had  that  difficulty  with  the 
East  Boston  toils.  Any  bondholders  would  have  objected  to 
abolishing  the  East  Boston  tunnel  tolls;  but  they  went  to 
work  to  try  to  get  the  consent  of  the  bondholders,  and  the 
bondholders,  being  many  of  them  trustees,  of  course  said  they 
could  not  consent. 

Commissioner  Eastman.  Would  the  company  be  willing 
to  sell  the  elevated  lines  to  the  State  as  well  as  the  subways? 

Mr.  Snow.  There  has  been  no  vote  taken  on  it,  but  I 
think  I could  persuade  them  to  do  it  if  the  State  wanted  to 
buy  them. 

Commissioner  Eastman.  Is  there  any  difference  in  prin- 
ciple between  those  lines  and  the  subway? 

Mr.  Snow.  I don’t  think  there  is  very  m ich  difference 
except  one  is  underground,  and  the  other  is  not. 

Commissioner  Noyes.  Well,  you  own  one? 

Mr.  Snow.  We  own  both,  — that  is,  we  own  the  Cam- 
bridge subway.  I think  they  would  be  very  glad  to  enter- 
tain any  such  jjroposition. 

The  Lieitenant-CiOVERNOu.  Mr.  Snow,  when  would 
you  like  to  go  on  with  a further  hearing? 


1917.] 


HOUSE  — No.  1875. 


23 


Mr.  Snow.  So  far  as  we  are  concerned  we  have  finished 
our  case  to  this  extent.  We  have  presented  our  views  and 
stand  ready  to  verify  any  of  .these  facts  which  we  have  pre- 
swited,  or  give  you  any  further  information  which  the  Com- 
mission may  want.  I do  not  think  I want  to  make  any 
requests  to  the  Commission,  because  the  Commission  has 
very  kindly  postponed  the  beginning  of  the  hearings  at  my 
request.  As  I am  now  able  to  go  on  I think  I should  hold 
myself  subject  to  the  wishes  of  the  Commission. 

The  Lieutenant-Governor.  Are  there  any  cities  or 
towns  represented  here?  [No  response.]  The  cities  and 
towns  were  all  notified,  were  they  not,  Mr.  Noyes? 

Commissioner  Noyes.  Yes,  sir. 

The  Lieutenant-Governor.  And  notice  was  published 
in  the  newspapers  in  Boston? 

Commissioner  Noyes.  Yes,  sir. 

The  Lieutenant-Governor.  Have  you  had  any  com- 
munications from  any  cities  and.  towns? 

Commissioner  Noyes.  Only  from  His  Honor  the  Mayor 
of  Boston,  who  acknowledged  the  receipt  of  the  com- 
munication and  made  no  reference  to  having  a representa- 
tive here. 

The  Lieutenant-Governor.  The  cities  and  towns  of 
course  have  not  been  furnished  with  any  of  the  exhibits 
which  have  been  filed  here? 

Mr.  Snow.  We  are  intending  to-night  to  send  them  to 
the  mayors  and  city  solicitors  of  the  various  cities  and 
towns. 

Commissioner  Allen.  That  includes  your  remarks? 

Mr.  Snow.  Yes,  sir. 

Commissioner  Allen,  hi  very  thing  that  we  have? 

Mr.  Snow'.  Yes. 

Commissioner  Allen.  Unless  some  one  wishes  to  express 
further  opinions,  I move  that  we  adjourn  subject  to  the  call 
of  the  Chair. 

The  Lieutenant-Governor.  1 think  we  will  do  that 
with  the  understanding  that  Mr.  Noyes  notify  each  city  and 
town,  and  they,  having  been  then  provided  with  the  evidence. 


24 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


that  I they  communicate  with  him  as  to  when  they  will  be 
ready  to  go  on  with  the  hearing.  If  there  is  no  objection 
the  Commission  will  adjourn  subject  to  the  call  of  the  Chair. 

Hearing  adjourned,  to  be  resumed  upon  the  call  of  the 
chairman. 


1917.] 


HOUSE  — Xo.  1875. 


25 


THIRD  DAY. 

Hearing  held  at  Room  362,  State  House,  Boston,  Mass., 
at  10  A.M.,  on  October  27,  1916. 

Present.  — President  Wells,  Speaker  Cox,  Senator  Eldridge, 
Representatives  Jewett  and  Newhall,  Commissioners  Macleod, 
Meaner,  Eastman,  Stone  and  Russell  [of  the  Public  Service 
Commission]  and  Commissioners  Quincy,  Allen,  Ellis  and 
X^oyes  [of  the  Boston  Transit  Commission]. 

Absent.  — The  Lieutenant-Governor,  Senator  Bates,  Repre- 
sentatives Donovan  and  Lawler,  and  Commissioner  Swain. 

Appearances.  — For  the  Boston  Elevated  Railway  Com- 
pany: Matthew  C.  Brush,  Esq.,  President. 

Chairman  Macleod  of  the  Public  Service  Commission  pre- 
siding. 

Chairman  Macleod.  The  Lieutenant-Governor,  chair- 
man of  this  Commission,  has  addressed  a letter  to  President 
Wells  of  the  Senate,  and  similarly  to  myself,  stating  that  it 
would  be  impossible  for  him  to  be  present  this  morning,  and 
suggesting  that  Senator  Wells  and  myself  should  conduct  the 
hearing  this  morning.  As  President  Wells  is  not  accustomed 
to  the  duties  of  a presiding  officer  [laughter]  he  has  asked  me 
to  take  charge  of  the  meeting  this  morning. 

This  meeting,  as  I understand  it,  has  been  called  at  the 
request  of  the  Mayor  of  Boston  and  the  Mayor  of  Cambridge. 
The  secretary  has  just  received  a communication  on  the  tele- 
phone from  the  Mayor  of  Boston,  stating,  as  I understand 
it,  that  he  desires  an  opportunity  to  be  heard  on  this  matter 
at  some  later  time,  and  stating  also  that  he  might  come  up 
here  this  morning  to  ask  for  a continuance,  and  the  fixing 
of  a date  for  a subsequent  hearing. 

I should  like  to  inquire  whether  the  city  of  Cambridge  is 
represented  here  this  morning?  [No  response.] 

Commissioner  Noyes.  I think,  Mr.  Chairman,  the  absence 
at  the  present  time  of  a representative  of  the  city  of  Cam- 


26 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


bridge  may  be  explained  by  the  fact  that  the  Mayor  of 
Cambridge  thought  that  the  Mayor  of  Boston  would  be 
present  at  the  opening  of  the  hearing  and  would  probably 
speak  for  an  hour  or  more,  in  which  case  the  Mayor  of 
Cambridge  would  then  succeed  him.  That  is,  in  a way, 
explanatory  of  his  absence. 

Chairman  Macleod.  I should  expect  that  if  Boston  is 
not  going  to  be  represented  here  this  morning,  and  does  not 
desire  to  present  its  case  this  morning,  that  the  Mayor  of 
Cambridge  would  probably  want  a similar  continuance.  Did 
I correctly  state  the  position  of  the  Mayor  of  Boston? 

Commissioner  Noyes.  Yes,  he  thought  that  he  might 
come  up  here  himself  for  a minute  or  two  this  morning,  and 
ask  to  be  heard  at  a later  date,  some  date  not  within  10  days. 

While  we  are  waiting,  Mr.  Chairman,  there  are  one  or 
two  perfunctory  matters.  I move  that  certain  bills  amount- 
ing to  S39.18  be  approved  subject  to  the  approval  of  the 
chairman. 

[The  motion  was  duly  seconded  and  upon  a voice  vote  was 
agreed  to.] 

I move,  Mr.  Chairman,  that  the  chairman  of  the  Commis- 
sion be  authorized  to  sign  all  requests  on  him  for  payment 
by  the  Commonwealth  of  bills  incurred  by  the  Special  Com- 
mission appointed,  under  chapter  158  of  the  Resolves  of  1916, 
to  investigate  the  financial  condition  of  the  Boston  Elevated 
Railway  Company. 

[The  motion  was  duly  seconded,  and  upon  a voice  vote  was 
agreed  to.] 

Chairman  Macleod.  Are  you  appearing  for  the  city  of 
Boston,  Mr.  Sullivan? 

John  A.  Sullivan,  Esq.  [corporation  counsel,  city  of 
Boston].  I expected  to  meet  the  Mayor  this  morning,  and  I 
assume  that  some  one  has  forgotten  to  remind  him  of  his 
engagement  here  this  morning. 

Chairman  Macleod.  We  have  had  a telephone  message 
from  him  stating  that  he  desired  to  have  this  hearing  go 
over  for  ten  days  or  so. 

Mr.  Sullivan.  That  is,  so  far  as  the  city’s  right  to  be 
heard  is  concerned? 


1917.] 


HOUSE  — No.  1875. 


27 


Chairman  Macleod.  Yes.  Is  there  any  one  at  all  who 
desires  to  be  heard  at  this  time?  [No  response.] 

Commissioner  Ellis.  I think  we  better  adjourn  subject 
to  the  call  of  the  chairman. 

Chairman  Macleod.  Mr.  Sullivan,  do  you  think  it 
would  be  satisfactory  if  the  meeting  adjourned  now  and  if 
the  Mayor’s  office  got  in  touch  with  Mr.  Noyes  informalK" 
in  regard  to  fixing  a future  date  for  hearing? 

Mr.  Sullivan.  I should  say  so. 

Chairman  Macleod.  If  there  is  no  one  who  desires  to  be 
heard  this  morning,  this  meeting  will  be  adjourned  subject 
to  the  call  of  the  Chair,  with  the  understanding  that  the 
secretary  will  get  in  touch  with  the  Mayor  of  Boston,  with 
a view  to  fixing  the  date. 

Meeting  adjourned,  to  be  resumed  (date  subsequently 
fixed)  at  10  o’clock,  on  Friday,  November  10,  1916. 


28 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


FOURTH  DAY. 

Hearing  held  at  Room  362,  State  House,  Boston,  Mass., 
at  10  A.M.,  on  November  10,  1916. 

Present. —k\\  the  members  of  the  Commission,  viz.:  the 
Lieutenant-Governor,  President  Wells,  Speaker  Cox,  Sena- 
tors Bates  and  Eldridge,  Representatives  Jewett,  Newhall, 
Donovan  and  Lawler,  Commissioners  Macleod,  hleaney. 
Stone,  Eastman  and  Russell  [of  the  Public  Service  Commis- 
sion] and  Commissioners  Swain,  Alien,  Ellis,  Quincy  and 
Noyes  [of  the  Boston  Transit  Commission]. 

Appearances.  — For  the  Boston  Elevated  Railway  Com- 
pany, Matthew  C.  Brush,  Esq.,  president,  Frederic  E.  Snow, 
Esq.  [Gaston,  Snow  & Saltonstall],  counsel.  For  the  city  of 
Boston,  Hon.  James  M.  Curley,  Mayor,  and  Hon.  John  A. 
Sullivan,  corporation  counsel.  For  the  city  of  Cambridge, 
Wendell  D.  Rockwood,  Mayor.  FYr  the  Cambridge  Board  of 
Trade,  Walter  C.  Wardwell,  Esq.,  president,  and  Gilbert 
A.  A.  Pevey,  Esq.,  chairman  of  the  Legislative  Committee, 
and  Robert  Walcott,  Esq.,  chairman  Committee  on  Munic- 
ipal Affairs. 

Commissioner  Macleod  [presiding  temporarily  in  the 
absence  of  the  Lieutenant-Governor].  Pending  the  arrival 
of  His  Honor  the  Lieutenant-Governor,  I have  been  requested 
to  call  the  meeting  to  order,  and  to  have  the  hearing  proceed. 

This  hearing  is  called  this  morning  for  the  special  purpose 
of  hearing  from  His  Honor  the  Mayor  of  Boston,  and  also 
from  the  Mayor  of  Cambridge.  We  shall  be  glad  at  this 
time  to  hear  from  IMayor  Curley. 

lion.  James  M.  Curhip  Mayor  of  Boston. 

IMr.  Chairman  and  Gentlemen:  — The  jwesent  situation,  as 
it  affects  not  only  trans])ortation  in  Boston  but  as  it  affects 
the  financial  condition  of  the  Boston  Elevated  Railway  sys- 
tem, is  in  no  sense  new.  Protests  have  been  voiced  con- 


1917.] 


HOUSE  — No.  1875. 


29 


tinually  from  Dorchester,  East  Boston,  Roxbury,  West 
Roxbury,  South  Boston,  and  it  might  in  truth  be  said,  from 
every  section  of  the  city,  against  the  lack  of  proper  trans- 
portation facilities,  coupled  with  a general  demand  for  exten- 
sion of  subways  beyond  the  ability,  if  I might  use  that  term, 
of  any  corporation  to  digest  the  demand. 

To  my  mind  the  situation  has  reached  that  stage  where 
the  people  must  determine  on  a choice  either  of  providing 
the  necessary  relief  to  meet  the  situation,  or  to  seriously 
consider  the  question  of  public  ownership,  and  I have  in- 
corporated my  ideas  on  the  subject  in  a little  brief  which  I 
will  be  very  pleased  to  submit  to  the  committee.  And  if 
there  is  any  question  which  they  desire  to  ask  at  the  con- 
clusion-, 1 shall  be  very  glad  to  answer  it. 

[Lieutenant-Governor  Coolidge  presiding.] 

The  circumstances  under  which  your  Honorable  Commis- 
sion has  been  appointed  are  extraordinary,  if  not  unprece- 
dented, in  the  history  of  the  Commonwealth.  You  have  a 
mandate  from  the  Legislature,  under  a resolve  passed  in  1916, 
“to  consider  the  financial  condition  of  the  Boston  Elevated 
Railway  Company:  what  changes,  if  any,  should  be  made  in 
existing  laws  relative  to  that  company  to  enable  it  to  meet 
the  reasonable  demands  of  the  public  for  the  extension  and 
improvement  of  its  system  of  transportation;”  also  to  con- 
sider “the  advisability  of  any  changes  in  subway  rentals,  any 
reduction  in  taxes,  and  any  increase  in  fares  or  changes  in  the 
present  transfer  system”  and  to  make  such  recommendations 
to  the  general  court  as  in  your  judgment  “may  be  necessary 
or  desirable  to  enable  the  company  to  provide  a more  efficient 
service  and  improve  its  credit.”  The  nature  of  the  problem 
you  have  to  consider  and  the  character  of  the  Commission 
appointed  to  consider  it  make  the  occasion  an  exceedingly 
impressive  one. 

The  question  of  the  Elevated’s  finances  has  arisen  because 
of  the  company’s  own  statement  to  the  Governor  of  the 
(k)mmon wealth  that  “at  the  present  time  the  company  is 
unable  to  obtain  the  additional  necessary  capital  for  the 
equipment  of  tunnels  and  ra])id  transit  lines  now  in  the  course 
of  construction  and  for  other  necessary  additions  and  im- 


30 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


provements  for  the  reason  that  it  has  already  issued  the 
amount  of  bonds  allowed  by  law  and  is  unable  to  sell  its 
stock  at  par,  which  is  the  minimum  price  required  by  law.” 

It  is  common  knowledge  that  the  company  cannot  sell  its 
stock  at  par,  and  the  result  is  that  it  cannot  issue  additional 
stock.  It  is  also  true  that  it  cannot  issue  additional  bonds 
because  its  bonds,  notes  and  other  evidences  of  indebtedness 
exceed  in  amount  the  sums  paid  to  the  company  for  the 
stock  already  issued.  These  facts  being  admitted,  the  con- 
clusion is  inevitable  that  the  company  must  obtain  relief  in 
some  form  if  it  is  to  meet  the  reasonable  requests  of  the 
public  for  additional  rapid  transit  facilities.  Whether  that 
relief  can  be  obtained  by  the  action  of  the  company  itself, 
namely,  by  putting  its  own  house  in  better  order, . by  the 
policy  of  strict  economy,  seems  to  me  to  be  the  first  ques- 
tion which  you  ought  to  consider.  The  company  claims  that 
its  plight  is  not  due  to  unwise  management  of  its  affairs,  but 
rather  to  its  attempt  to  extend  rapid  transit  facilities  faster 
than  its  resources  would  warrant.  I cannot  undertake  to 
state  what  the  facts  are.  Your  Commission  will  hear  all  the 
evidence  and  you  will  be  able  to  arrive  at  a just  conclusion 
as  to  who  is  responsible  for  the  present  financial  condition  of 
the  company.  If  you  should  find  that  its  condition  is  due  to 
its  own  fault,  then  it  would  appear  that  the  company  is  not 
entitled  to  some  of  the  measures  of  relief  which  it  asks 
through  legislative  action.  If,  on  the  other  hand,  you  find 
after  careful  consideration  of  all  the  facts  that  the  company’s 
financial  condition  is  not  due  to  improper  management  on  its 
own  part  but  due  to  its  attempt  to  respond  more  rapidly  to 
the  ])ublic  demand  for  increased  transportation  facilities  than 
its  resources  would  warrant,  then  it  would  aj)])ear  to  be  a 
case  which  calls  for  extraordinary  relief  through  legislative 
action.  You  will  not  be  embarrassed  by  one  circumstance 
which  commojily  is  foimd  in  cases  of  public  service  corjmra- 
tions  which  find  themselves  in  financial  difficulties,  namely, 
the  inflation  of  ca])ital  through  the  watering  of  stock,  nor  will 
you  be  embarrassed  by  the  fact  that  the  c()mj)any  has  ])aid 
exce.ssive  dividends  in  the  ])ast.  1 think  it  is  generally  ad- 
mitted that  the  comj)ajiy’s  stock  represents  actual  values  and 


1917.] 


HOUSE  — No.  1875. 


31 


that  its  dividend  rate  has  never  been  in  excess  of  6 per  cent 
on  the  par  value  of  the  stock.  The  elimination  of  these  two 
factors  will  necessarily  confine  your  attention  .to  the  ques- 
tion whether  it  is  the  company  or  the  public  which  is  respon- 
sible for  the  present  financial  condition  of  the  company. 

And  I mdght  say  in  this  connection  that  the  city’s  priyilege 
does  not  extend  to  corporations  other  than  the  cities  gener- 
ally. That  is,  if  we  find  the  demand  for  certain  public 
necessities  exceeds  our  ability  to  pay,  it  is  within  our  province 
to  increase  the  tax  rate  and  to  meet  those  excessive  demands. 
The  company  is  confronted  with  a situation  where  it  does  not 
have  the  opportunity  which  the  cities  have. 

If  you  find  that  the  company  has  not  caused  its  own  finan- 
cial troubles  by  bad  management,  but  that  its  condition  is  due. 
to  the  fact  that  its  extension  of  rapid  transit  facilities  has 
been  greater  than  the  company  could  successfully  manage 
under  the  limitations  of  the  five  cent  fare,  then  it  will  be 
your  clear  duty  to  recommend  some  form  of  financial  relief. 
If  you  find  that  a proper  case  of  relief  has  been  made  out,  I 
trust  that  you  will  not  perform  only  half  of  your  task, 
namely,  to  meet  only  the  present  financial  difficulties  of  the 
company,  without  taking  into  account  further  difficulties 
which  will  arise  if  the  still  more  extensive  program  of  tunnel 
and  subway  development  which  the  public  demands  and  is 
entitled  to  is  carried  out  in  the  near  future. 

In  this  connection  I might  say  that  the  demand  is  general 
for  the  extension  of  the  subway  which,  upon  completion,  will 
terminate  at  present  at  Andrew  Square.  The  demand  is 
general  that  the  subway  extension  continue  to  Fields  Corner, 
and  even  beyond,  despite  the  tremendous  cost.  And  Rox- 
bury  is  making  similar  demands.  If  you  find  that  under  the 
limitations  of  the  five  cent  fare  the  company  cannot  finance 
the  tunnel  and  subway  undertakings  which  this  commujuty 
has  a right  to  demand  shall  be  accomplished,  then  you  will 
be  called  u})on  to  recommend  a radical  remedy,  one  which 
will  go  to  the  root  of  the  trouble,  and  which  will  provide  a 
permanent  cure. 

It  is  important  to  observe  that  the  legislative  resolve 
asked  you  to  consider  means,  not  only  to  “improve  its 


32 


BOSTON  ELEA^\TP]D  RAILWAY. 


[Mar. 


credit,”  but  also,  ‘^to  enable  the  company  to  provide  a more 
efficient  service;”  and  this  latter,  in  my  opinion,  is  a purpose 
of  paramount  importance  to  the  entire  community.  I trust, 
therefore,  that  your  inquiry  shall  be  broad  enough  to  include, 
not  merely  the  subject  of  present  relief,  if  you  find  that  relief 
should  be  granted,,  but  the  far  more  important  subject  of 
relief  sufficient  to  insure  future  expansion  of  rapid  transit 
facilities  to  an  extent  necessary  to  meet  the  growing  demands 
of  a progressive  community.  In  other  words,  the  present 
condition  is  simply  a sample  of  what  we  may  expect  in  the 
future. 

This  community  cannot,  without  blinding  itself  to  its  own 
interests  in  progressive  community  effort,  accept  the  present 
stage  of  tunnel  and  subway  construction  as  the  final  one. 
We  cannot  stand  still,  either  in  justice  to  ourselves  or  to 
posterity.  We  must  go  forward  in  the  execution  of  any  well- 
conceived  plan  which  will  bring  more  quickly  the  laborer  to 
his  factory,  the  business  man  to  his  store,  the  professional 
man  to  his  office,  and  bring  them  back  more  quickly  to  their 
homes  than  is  possible  now  under  existing  means  of  transpor- 
tation. By  such  efforts  we  can  improve  our  business,  develop 
our  waste  spaces,  increase  our  taxable  values,  augment  the 
public  revenues,  add  to  the  comfort  of  the  people,  and  kjiit 
the  various  parts  of  this  community  into  a more  compact 
social  and  industrial  organization. 

If  you  find  that  the  company  must  be  helped  in  order  to 
execute  a program  of  such  benefit  to  the  public,  you  must 
determine  the  way  in  which  aid  shall  be  given.  If  it  is 
granted  through  legislative  action,  it  is  the  public  which 
must  iji  the  last  analysis  furnish  it.  The  company  can  give 
the  public  nothing  except  what  the  public  pays  for.  It  has 
not  ijdierited  wealth,  and  jio  endowment.  The  public  must 
furnish  the  money  for  the  stock  and  bonds  issued  by  the 
compajiy,  and  the  public  must  furnish  the  operating  revenue 
of  the  com])any  through  the  fares  for  trans])ortation.  Whether 
the  public  shall  hereafter  give  more  revenue  to  the  company 
in  the  form  of  increased  fares  or  the  ])ublic  permits  the  com- 
I)any  to  increase  its  net  o])erating  revenue  by  retaining  a 
larger  ])ortioji  of  such  revenue  through  the  medium  of  re- 


1917.] 


HOUSE  — No.  1875. 


33 


duced  taxes,  the  gain  to  the  company  in  either  case  must  be 
at  the  expense  of  the  public.  In  my  opinion  it  is  immaterial 
in  which  form  the  aid  is  extended  if  you  look  at  the  question 
from  the  standpoint  of  the  community  as  a whole. 

So  far  as  providing  additional  capital  is  concerned,  it  may 
be  that  it  will  be  sufficient  to  have  the  State  buy  from  the 
company  the  Cambridge  subway  and  to  have  a lease  made 
under  which  the  company  shall  pay  rentals  to  the  State 
sujSicient  in  amount  to  reimburse  the  State  for  its  expendi- 
tures. This  will  be  in  effect  only  a loan  by  the  State  of  its 
credit  to  the  company  similar  in  form  to  the  method  of  the 
city  of  Boston  by  which  the  city  lends  its  credit  to  the  com- 
pany as  a means  of  procuring  tunnel  and  subway  construc- 
tion. But  quite  apart  from  any  question  of  financial  relief  to, 
the  company,  I should  advocate  the  ownership  by  the  State  of 
the  Cambridge  subway  because  I believe  that  to  be  in  ac- 
cord with  sound  public  policy.  Private  ownership  of  the 
tunnels  and  subways  under  the  public  streets  is  in  my  judg- 
ment prejudicial  to  the  interest  of  the  community,  and  the 
sooner  the  Boston  system  is  applied  to  the  Cambridge  sub- 
way, that  is,  the  sooner  the  Cambridge  subway  is  acquired 
by  the  State,  the  better  it  will  be  for  the  future.  I do  not 
believe  the  company  should  be  regarded  in  the  same  light  as 
a visiting  auctioneer  who  hires  a store  and  proceeds  to  sell 
imitation  jewelry,  but  that  it  represents  sufficient  permanent 
investment  to  warrant  the  return  of  that  money  by  the 
State. 

Another  means  of  relief  which  will  harm  no  one  will  be 
the  return  by  the  Commonwealth  of  Massachusetts  to  the 
company  of  the  $500,000  which  the  latter  has  deposited  as  a 
guarantee  fund  for  the  payment  of  land  damage  claims.  No 
one  doubts  that  the  company  will  be  able  to  pay  all  its 
land  damage  claims.  While  the  original  deposit  may  have 
been  justified  in  the  experimental  stage  of  rapid  transit 
development,  it  is  no  longer  justified  and  there  is  every 
reason  why  the  company  should  have  this  amount  returned. 

Another  means  of  relief,  can  be  found  in  the  abolition  of 
the  eight-cent  check,  which  can  be  abolished  without  giving 
any  one  just  ground  for  complaint. 


34 


BOSTON  ELEVATED  RAILWAY. 


[]Mar. 

There  is  no  reason  why  one  portion  of  the  community 
should  be  permitted  to  ride  for  four  cents,  and  another  por- 
tion be  required  to  pay  five. 

Another  form  of  relief  would  come  in  the  granting  of  legis- 
lative authority  to  the  company  to  take  additional  land  so 
as  to  enclose  areas  at  transfer  points.  This  would  enable 
the  company  to  reduce  operating  expenses  to  some  extent, 
and  it  would  reduce  the  loss  now  caused  by  the  improper  use 
of  transfer  checks.  But  regardless  of  any  question  of  finan- 
cial benefit  to  the  company,  I strongly  advocate  the  granting  of 
such  authority  in  the*  interest  of  the  public  itself.  These 
enclosed  areas’  greatly  promote  the  safety,  the  convenience 
and  the  comfort  of  the  public.  Even  if  the  company  were 
opposed  to  the  enclosing  of  such  areas  the  State  should 
demand  it  in  the  interest  of  its  own  citizens. 

The  question  of  permitting  the  company  to  temporarily . 
charge  off  depreciation  against  the  premiums  received  from 
sales  of  stock  is  a technical  matter  which  will  have  to  be 
considered  by  this  Commission  and  its  experts.  If  the  Com- 
mission feels  that  this  temporary  indulgence  can  be  granted 
to  the  company  without  injury  to  the  public  interest  I think 
it  should  be  done.  If,  on  the  other  hand,  it  seems  that  it 
would  create  a very  dangerous  precedent,  I should  think  the 
Commission  would  not  be  justified  in  recommending  such  a 
remedy.  If  the  relief  which  would  come  through  the  adop- 
tion of  this  temporary  ex]:)edient  would  be  of  material  benefit 
to  the  company,  I should  think  a remedy  might  be  provided, 
under  such  safeguards  of  the  public  interest  as  to  prevent 
any  injury  to  the  Commonwealth  or  to  its  citizens;  and  if 
such  should  appear  to  be  the  case  I think  that  relief  in  this 
form  should  be  granted.  So  far,  I have  discussed  those 
aspects  of  the  problem  which  are  the  least  controversial. 

If  you  are  brought  face  to  face  with  the  ])roblem  of  pro- 
viding relief  either  through  the  form  of  increased  fares  or  of 
reductioji  of  taxes  i)aid  by  the  comj)any  to  the  municipalities 
in  which  the  com])any  o])erates,  you  will  find  yourselves  in 
serious  difficulties,  (hi  one  hand,  the  traveling  public  will 
o])])ose  increases  of  fare,  and  on  the  other  hand  munici])alities 
will  o])])ose  reduction  of  taxes.  If  one  or  the  other  of  these 


1917.] 


HOUSE  — No.  1875. 


35 


forms  of  relief  must  in  your  opinion  be  applied,  then  in  my 
judgment  it  would  be  better  for  the  community  as  a whole 
to  have  a reduction  made  in  the  company’s  taxes  than  to 
have  relief  come  through  the  medium  of  increased  fares.  I 
sincerely  hope  that  some  means  of  relief  may  be  found 
which  does  not  require  either  the  increase  of  fares  or  the 
reduction  of  taxes.  In  my  opinion  either  or  both  would  be 
open  to  grave  objections,  yet  of  the  two  evils  I am  con- 
vinced that  the  increase  of  fares  is  by  far  the  greater,  and 
therefore  if  a choice  must  be  made  between  these  two  evils 
I should  unhesitatingly  recommend  a reduction  in  taxes. 
So  far  as  the  city  of  Boston  is  concerned,  however,  I must 
add  an  important  qualification  to  the  suggestion  as  to  re- 
duced taxes  which  I shall  develop  later  in  my  remarks. 
For  the  moment  I will  confine  myself  to  the  reasons  for  pre- 
ferring the  reduction  of  taxes  to  the  increase  of  fares.  In  the 
first  place  the  increase  in  fares  is  surrounded  with  great 
practical  difficulties.  Legislative  opposition  to  such  a recom- 
mendation would  be  sure  to  arise  owing  to  protests  on  the 
part  of  the  traveling  public.  Again,  there  would  be  serious 
obstacles  to  the  successful  working  of  the  increased  fare 
schedule,  whether  the  schedule  provided  for  an  increase  to  be 
applied  uniformly  throughout  the  territory  in  which  the  rail- 
way operates  or  provided  for  increased  'fares  only  for  the 
longer  runs.  Complaints  would  certainly  arise  as  to  dis- 
crimination against  the  people  of  certain  sections;  it  would 
be  said  so  often  and  so  vigorously,  and  inevitably  so  truly 
that  relative  justice  had  not  been  accomplished,  that  the 
scheme  would  probably  have  to  be  abandoned  in  its  entirety 
and  a uniform  fare  be  re-established.  Moreover,  it  would 
be  such  a hardship  on  so  many  that  could  not  afford  to  pay 
the  increased  fare  that  I am  inclined  to  believe  it  ought  not 
to  be  attempted.  It  may  be  argued  that  the  company 
transports  some  persons  at  a loss;  that  the  people  who  use 
the  service  should  bear  the  burdens  of  service.  In  other 
words,  that  if  the  company  is  not  obtaining  sufficient  operat- 
ing revenue  the  increase  in  revenue  should  come  directly  from 
the  persons  who  use  the  car.  This  is  logical,  I admit;  but 
practically  there  is  no  great  difference,  so  far  as  the  ])ublic 


36 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


is  concerned,  whether  relief  comes  in  the  form  of  increased 
fares  or  reduced  taxes.  The  great  majority  of  the  people 
living  in  the  municipalities  in  which  the  company  operates 
now  use  the  company’s  cars  and  a still  greater  number  will 
use  them  when  more  rapid  transit  facilities  are  furnished. 
Again,  all  the  people  of  these  municipalities,  those  who  use 
the  company’s  cars  and  those  who  do  not,  will  share  in  the 
benefits  accruing  from  improved  transportation;  that  is  to 
say,  from  increased  valuations  of  property  and  the  resulting 
reduction  of  taxes  or  the  extension  of  municipal  service.  I 
am  inclined  to  believe,  therefore,  that  taking  the  community 
as  a whole,  less  hardship  would  be  caused  through  a reduc- 
tion of  taxes  than  through  an  increase  of  fares,  and  for  this 
reason  I prefer  a temporary  reduction  of  taxes  as  a choice  of 
evils. 

In  other  words,  the  car  rider  should  be  considered  and  he 
should  not  be  required  to  bear  the  entire  burden  of  improved 
service  of  municipal  development,  and  of  general  benefit  to 
the  community.  The  real  estate  owner  and  operator  in  the 
vicinity  of  a line  where  a system  of  rapid  transit  has  been 
developed  benefits  through  increased  value  of  his  property. 
He  may  not  ride  in  the  street  car  in  a year;  yet  he  benefits 
through  that  rapid  transit.  He  should  be  required  to  bear 
his  portion.  So  with,  the  storekeeper,  so  with  the  business 
man  generally.  So  it  would  be  unfair  to  increase  the  rate 
of  fare  to  the  individual,  and  it  would  be  eminently  fair  that 
the  entire  community  bear  their  share  and  their  proportion 
of  the  burden. 

This  brings  me  to  the  qualification  which  I spoke  of  in 
connection  with  the  situation  of  the  city  of  Boston  in  the 
event  of  having  the  company’s  taxes  reduced  temporarily. 
Let  me  interpolate  once  more:  If  this  Commission  can  find 
some  means  of  providing  relief  other  than  temporary  reduc- 
tion of  taxes  or  increase  of  fares,  that  would  be  a most  happy 
solution  of  the  jwoblem;  but  as  you  may  possibly  find,  that 
relief  must  come  either  through  increased  fares  or  tem- 
porarily reduced  taxes,  and  as  I have  clearly  indicated  my 
preference  as  between  those  two  evils,  I must  insist  that  if  a 
temj)orary  reduction  of  taxes  is  recommended,  it  be  accom- 


1917.] 


HOUSE  — No.  1875. 


37 


panied  by  a recommendation  authorizing  the  city  of  Boston 
to  increase  its  tax  limit  sufficiently  to  meet  the  deficit  in  the 
revenue  caused  by  the  reduction  in  the  taxes  paid  by  the 
company  to  the  city.  You  must  remember  that  the  city 
could  not  by  its  own  action  adjust  itself  to  this  new  situa- 
tion. The  amount  of  the  taxes  which  it  can  raise  for  general 
municipal  purposes  is  fixed  by  law,  and  an  increase  in  the 
tax  limit  cannot  be  made  except  with  the  consent  of  the 
Legislature.  In  this  respect  the  city  is  unlike  other  cities 
in  the  State,  for  the  other  cities  may  by  their  own  action 
increase  their  tax  limit. 

Boston  is  exempted  from  that  very  happy  privilege,  but 
wise  restriction. 

It  would  be  very  unfortunate  for  the  city  of  Boston  to 
find  its  own  public  service  crippled  as  a result  of  its  contribu- 
tion to  the  development  of  rapid  transit  facilities.  I would 
not  regard  the  attempt  to  provide  for  further  rapid  transit 
facilities  as  successful  if  the  result  were  only  to  give  relief 
to  the  company  at  the  expense  of  our  own  street  develop- 
ment or  of  our  hospital,  public  health,  or  public  library 
service,  for  example.  Therefore,  I must  insist,  in  the  inter- 
est of  all  the  people  of  the  city  of  Boston,  that  if  you  recom- 
mend a reduction  in  the  taxes  paid  by  the  company,  you 
shall  also  recommend,  as  an  integral  part  of  the  proposed 
legislation,  authority  to  increase  the  tax  limit  of  the  city  to 
an  extent  sufficient  to  make  up  the  deficit  caused  by  the 
reduction  in  the  company’s  tax. 

I need  not  inform  you  that  I am  aware  of  the  political 
dangers  which  I encounter  by  appearing  before  this  Commis- 
sion and  stating  any  opinion  whatever.  I think  it  would 
be  safer  for  me  to  go  in  the  country  and  play  golf  for  a 
couple  of  weeks.  But  I recpgnize  a public  duty,  and  a public 
responsibility,  and  I am  here. 

It  would  be  much  safer  for  me  politically  to  dodge  respon- 
sibility by  keeping  silent.  I feel,  however,  that  as  the  chief 
executive  of  a great  city  I owe  you  the  duty  of  expressing  my 
opinion  on  this  subject,  and  I cannot  keep  silent  when  tlie 
vital  interests  of  the  city  are  at  stake.  Therefore  I give 
you  my  opinion,  and  accept  responsibility  for  doing  so. 


38 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


To  sum  up: 

(1)  If  you  find  that  the  company  is  entitled  to  relief,  I 
advocate  the  giving  of  relief,  in  order  that  a comprehensive 
scheme  of  rapid  transit  development  may  be  executed  in  the 
interest  of  this  entire  community. 

(2)  I favor  the  granting  of  authority  to  enclose  areas 
at  transfer  points  in  the  interest  of  public  safety  and  con- 
venience. 

(3)  I favor  the  abolition  of  the  eight  cent  check  as  some- 
thing that  will  give  relief  to  the  company  without  giving 
any  one  reasonable  ground  for  complaint. 

(4)  I advocate  public  ownership  by  the  State  of  the 
Cambridge  subway  and  the  making  of  a lease  to  the  Ele- 
vated at  a rental  sufficient  to  reimburse  the  State. 

(5)  I recommend  the  careful  consideration  of  the  com- 
pany’s suggestion  that  it  be  permitted  to  charge  depreciation 
temporarily  against  premiums,  and  that  this  remedy  be 
adopted,  providing  the  Commission  believes  that  it  can  be 
applied  without  injury  to  the  moral  or  material  interests  of 
the  State. 

(6)  If  the  Commission  finds  that  some  measure  of  relief 
must  be  granted  either  through  increased  fares  or  the  tem- 
porary reduction  of  the  company’s  taxes,  I advocate  the 
temporary  reduction  of  taxes  as  a choice  of  evils,  but  I 
couple  this  with  the  demand  that  special  legislation  also  be 
provided  to  enable  the  city  to  raise  its  tax  limit  so  as  to 
meet  the  resulting  deficit. 

The  Lieutenant-Governor.’  Are  there  any  questions? 

Commissioner  Swain.  I would  like  to  ask  the  Mayor  if 
he  includes  under  “increase  of  fares”  the  abolition  of  cer- 
tain transfers? 

Commissioner  Ellis.  You  mean  the  abolition  of  certain 
free  transfers? 

Commissioner  Swain.  You  are  oj)])oscd  to  the  increase  of 
fares? 

Mayor  (,'urley.  Yes,  sir,  I am. 

Commissioner  Swain.  Does  that  include  the  abolition  of 
free  transfers,  or  partial  abolition  of  free  transfers? 

Mayor  Curley.  1 should  say,  yes. 


1917.] 


HOUSE  — No.  1875. 


39 


Commissioner  Swain.  Of  course  that  results  in  an  in- 
crease of  fare  to  certain  persons.  I wanted  to  get  your 
idea  on  that. 

Mayor  Curley.  With  your  enclosed  areas  you  practically 
do  away  with  free  transfers  anyway,  as  I view  it. 

Commissioner  Swain.  If  you  had  all  the  transfer  stations 
enclosed,  you  would. 

Mayor  Curley.  Yes. 

Commissioner  Noyes.  You  would  do  away  with  the  abuse 
of  transfers,  any  way? 

Mayor  Curley.  Yes,  with  the  abuse. 

Mr.  SuLLHWN.  And  some  of  the  expense. 

Mayor  Curley.  For  example,  a man  getting  on  a subway 
train  at  Scollay  Square  or  the  Old  South  Church  or  any 
place  on  the  subv/ay  down  town,  who  desires  to  go  to 
Dorchester,  can  go  to  Dudley  Street  and  transfer  there.  He 
would  still  have  the  transfer  privilege,  but  he  would  not 
have  the  right  to  take  that  transfer  ticket  out  and  give  it  to 
somebody  who  wanted  to  go  to  Dorchester,  if  he  did  not 
want  to  go  beyond  Roxbury. 

I think  there  has  been  too  much  dishonesty  on  the  part  of 
the  public  in  the  matter  of  the  use  of  street  car  service.  If 
the  transportation  company  is  to  be  required  to  extend  its 
subway  system  in  conformity  with  the  general  demand  of  the 
community,  it  must  get  every  possible  protection.  I have 
some  idea,  myself,  of  the  difficulties  under  which  a street 
railway  company  operates  at  the  present  time,  ahd  my’ 
judgment  is  based  on  our  own  experience  as  a municipality, 
in  the  matter  of  conducting  our  various  activities. 

The  street  railway  companies  and  steam  railroad  cmnpanies 
in  the  last  twenty  years  have  experienced  k complete  revo- 
lution in  the  matter  of  transporting  the  public.  They  no 
longer  use  the  old-fashioned  wood  tie.  If  a tie  is  used,  it  is 
a creosote  tie  to-day.  They  no  longer  use  the  60-pound  rail 
in  the  streets,  but  they  use  the  130-pound  rail  or  the  115- 
pound  rail,  — twice  as  heavy. 

They  are  required  to  build  their  cars  of  better  material, 
and  heavier.  They  require  the  construction  of  roadways  in 
conformity  with  existing  roadways.  To  a large  extent  they 


40 


BOSTON  ELEA^ATED  RAILWAY. 


[Mar. 


do,  but  not  altogether,  and  I wish  there  was  some  law  that 
would  compel  them  to. 

In  doing  that  they  quadruple  the  cost  of  construction  of 
roadway  over  which  their  cars  formerly  ran.  If,  for  example, 
they  ran  over  an  old-fashioned  dirt  roadway,  they  are  to-day 
required  to  put  in  a 7-inch  concrete  base,  and  on  top  of  that 
a wooden  block,  which  makes  the  cost  of  that  road  to-day 
four  times  what  it  ordinarily  would  be. 

In  addition  to  that,  there  is  the  increase  in  cost  of  labor, 
and  the  increase  in  the  cost  of  taxes,  which  is  quite  a re- 
spectable increase  in  the  last  ten  years. 

All  those  things  are  worthy  of  consideration,  and  at  the 
same  time  the  company  has  been  operating  at  the  old  fare 
schedule  rate,  and  in  addition  to  that  has  been  extending 
the  old  transfer  privilege,  and  the  public  has  not  been  honor- 
able with  the  companies  in  the  use  of  that  transfer  privilege. 

It  is  common  knowledge  that  at  almost  every  transfer 
point  along  the  system  a man  can,  or  he  could  within  a few 
years  past,  go  into  a store  and  make  a purchase,  and  get  a 
transfer  check  either  way,  if  he  was  friendly  with  the  clerk. 
That  abuse  has  been  very  common  and  I don’t  know  how 
many  fares  the  company  loses  in  a year,  in  that  manner.  ]\Iy 
observation  is  that  it  would  run  pretty  close  to  a million. 
Possibly  somebody  here  from  the  company  would  know  just 
what  it  is.  That  is  worthy  of  consideration.  The  abuse  of 
the  8-cent  check  privilege  is  also  worthy  of  consideration. 

The  situation  is  that  the  public  are  demanding  increasing 
facilities,  and  the  company  is  not  in  position  to  meet  the 
demand.  Either  the  company  must  be  provided  with  a 
means  of  relief,  or  the  state  must  assume  the  responsibility, 
which  I do  not  think  that  they  want  to  assume, — public 
ownershij).  And  I guess  they  would  have  to  have  both. 

Commissioner  ]\Iacleod.  Is  it  your  idea  in  providing  some 
means  of  relief  as  a means  of  securing  expansion  of  the  rapid 
transit  system,  that  it  should  provide  some  definite  plan  for 
such  improvement  as  a part  of  any  legislation  which  might 
be  enacted  at  this  time? 

Mayor  Curley.  I would  not  say  that  that  was  altogether 
necessary.  I would  say  that  if  a recommendation  based 


1917.] 


HOUSE  — No.  1875. 


41 


along  the  line  suggested,  differing  perhaps  materially  from  it 
according  to  your  investigation  and  judgmen^t,  should  be 
presented,  I believe  provision  should  be  made  that  in  no  case 
shall  the  comphny  be  permitted  to  pay  dividends  in  excess  of 
6 per  cent,  until  such  time  as  they  are  in  sound  condition 
financially.  I think  it  is  very  important  that  that  be  done. 
I think,  in  addition,  that  the  company  should  co-operate  to 
the  extent  of  instituting  every  possible  economy  with  a view 
to  helping  out  on  that,  themselves. 

Commissioner  Eastman.  If  the  risk  of  the  enterprise  is  to 
be  taken  from  the  stockholders  and  placed  upon  the  tax- 
payers of  the  cities  and  towns,  do  you  think  that  the  cities 
and  towns  ought  to  have  any  voice  in  the  management  of 
the  company? 

Mayor  Cueley.  I have  not  considered  that  phase  of  it. 
I am  satisfied  that  the  comp'ahy  would  be  very  anxious  to 
be  good.  The  Legislature  would  still  exercise  authority  over 
it.  The  Legislature  grants  the  franchises,  and  has  authority 
to  revoke.  There  is  one  thing  absolutely  certain,  and  I think 
it  is  admitted  by  everybody,  that  there  is  need  of  additional 
rapid  transit,  and  that  the  company  is  not  in  position  to 
provide  it.  ’ 

Commissioner  EastxMan.  As  I understand  you,  you  do  not 
think  that  the  cities  and  towns  ought  to  have  any  voice  in 
the  management  of  the  company  under  those  circumstances. 

Mayor  Curley.  I would  not  say  that.  T personally  be- 
lieve that  if  they  did  have  any  voice,  it  should  be  in  a 
supervisory  or  advisory  capacity.  I do  not  believe  that  they 
should  be  permitted  to  sit  in  as  members  of  the  Board  of 
Directors,  and  say  how  the  company  shall  be  run. 

Commissioner  Quincy.  Not  to  sit  in  as  a majority  of  the 
Board,  but  as  minority  members,  to  know  what  is  going  on. 

Mayor  Curley.  In  a supervisory  capacity,  yes;  but  I 
would  not  want  to  see  them  permitted  to  run  my  business. 

Commissioner  Quincy.  Isn’t  there  a great  difference  be- 
tween having  one  or  two  members  in  behalf  of  the  cities  and 
towns  to  sit  with  the  Board  of  Directors,  a number  far  too 
small  to  dominate  the  action  of  the  Board,  but  sufficient  to 
know  what  was  going  on,  and  anything  like  public  ownership? 


42 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mayor  Curley.  Yes,  there  is.  I should  say  that  I can 
see  no  objection  to  such  a proposition,  either  temporarily 
while  they  are  working  out  of  their  present  financial  diffi- 
culty, or  being  aided  out  of  it  by  the  State;  or  permanently. 
I think  it  would  be  a protection  to  the  company,  too. 

Commissioner  Ellis.  Would  you  be  satisfied,  yourself, 
Mr.  Mayor,  if  the  Boston  Elevated  finances  were  supervised 
by  some  public  commission? 

]Mayor  Curley.  I think  it  would  be  an  excellent  thing 
for  the  company,  and  for  the  public  as  well. 

Commissioner  Ellis.  That  would  satisfy  you,  would  it? 

Mayor  Curley.  Yes. 

Commissioner  Allen.  Mr.  Mayor,  would  the  supervision 
which  the  Public  Service  Commission  now  has  be  sufficient, 
or  would  you  suggest  greater  supervision? 

Mayor  Curley.  The  way  that  I view  it  now  is  this:  that 
this  is  a case  of  a patient  that  upon  diagnosis  is  found  to 
have  a very  severe  malady,  that  requires  constant  attention. 
I think  a special  commission  should  be  appointed  to  take 
care  of  that  case,  that  would  permit  of  constant  attention 
which  the  case  requires. 

Senator  Bates.  Have  you  any  definite  idfea  or  suggestion 
as  to  what  extensions  should  be  made  to  the  subways? 

Mayor  Curley.  No,  I would  not  attempt  to  offer  any. 

Senator  Bates.  The  committee  that  I served  on  last  year 
[Committee  oif  Metropolitan  Affairs]  was,  I think,  agreed 
that  subways  and  tunnels  have  been  advanced  helter  and 
skelter  without  any  definite  plans.  I think  it  would  be 
foolish  to  give  the  company  relief,  and  then  have  the  Legis- 
lature pile  on  additional  burdens.  We  ought  to  have  a defi- 
nite plan,  and  I wondered  if  you  had  any  suggestion  as  to 
what  should  be  then  required  of  them.  Do  you  think  that 
this  Commission  has  any  i)ower  to  lay  down  a plan  for 
future  transit  development  which  the  comj)any  can  rely  on 
and  the  public  can  rely  on,  which  will  be  a general  plan  to 
meet  the  public  needs  of  the  future? 

]\Jayor  Curley.  1 confess  that  in  common  with  every 
citizen  in  Boston  probably  I have  condemned  and  criticized 
the  Boston  Transit  Commission  perhaps  in  many  cases  justly, 
and  in  other  cases  unjustly.  I have  had  at  times  the  same 


' 1917.] 


HOUSE  — No.  1875. 


43 


view  which  you  hold  with  reference  to  the  lack  of  coherence 
in  the  matter  of  subway  development,  and  it  strikes  the 
average  citizen  in  that  way.  Whether  they  have  a definite 
plan  or  not  — I assume  that  they  have  worked  out  a definite 
plan.  If  they  have  not,  they  deserve  to  be  criticized  for 
failure  to  work  out  a definite  plan,  for  of  all  matters  subway 
and  tunnel  development  should  not  be  left  to  the  whim  or 
caprice,  or  strength  or  lung  power  of  some  particular  organi- 
zation, in  some  particular  section  of  some  community. 

As  it  stands  to-day,  the  organization  that  represents  the 
greatest  amount  of  lung  power  and  of  brass  stands  the  best 
prospect,  of  getting  subway  extension,  through  its  agitation, 
in  the  press  and  otherwise.  I assume  they  have.  Have  they, 
Mr.  Ellis,  a plan  for  the  future? 

Commissioner  Ellis.  . No.  You  see  the  Transit  Commis- 
sion, under  the  statute,  has  no  such  power.  The  Transit 
Commission  powers  are  extremely  limited,  and  that  has  been 
the  unfortunate  part  of  it.  The  Transit  Commission  has  no 
power  except  to  build  such  subways  as  it  is  instructed  to 
build  by  act  of  the  Legislature. 

Commissioner  Noyes.  And  to  make  such  reports  as  are 
required  by  the  Legislature. 

Commissioner  Ellis.  It  has  never  been  given  general 
power  to  provide  for  the  future  an  adequate  or  comprehen- 
sive plan. 

Mayor  Curley.  Then  it  strikes  me  that  in  connection  ' 
with  this  proposition,  they  should  have  the  power  to  make 
general  plans  for  subway  development.  We  have  had  that 
same  situation  in  our  park  development,  with  which  Mr. 
Quincy  is  familiar.  And  every  time  that  we  change  the 
administration,  the  personnel  of  that  Commission  seems  to 
change,  not  so  much  a matter  of  good  form  perhaps  as  of 
politics.  And  every  different  administration  has  changed  the 
plan.  It  was  not  until  a year  or  two  ago  that  a general  plan 
was  adopted.  Now  we  have  the  Olmsted  Brothers  antici- 
pating the  needs  for  the  next  liundred  years,  and  we  shall 
get  somewhere.  I don’t  know  why  the  same  thing  could  not 
have  applied  in  the  case  of  tlie  Transit  Commission,  with  a 
view  to  laying  out  our  transi)ortation  facilities  for  the  next 
forty  or  fifty  years. 


44 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commissioner  Noyes.  Do  you  think  there  is  any  subway 
which  has  proved  a worthless  or  unwise  investment?  In 
every  case  the  tenant  has  approved  the  subway  before  it  has 
been  authorized  by  the  Legislature.  I think  if  you  recall 
your  experience  in  connection  with  the  Boylston  Street  sub- 
way, which  has  developed  enormous  building  out  Brighton 
way,  and  Newton  way,  and  which  is  taxed  to  its  capacity 
ill  certain  hours,  certainly  the  Washington  Street  tunnel  and 
the  Cambridge  tunnel  for  which  the  Transit  Commission  was 
not  responsible  entirely,  and  the  Dorchester  tunnel  for  which 
the  people  are  already  crying  — I don’t  think  that  that  was 
a case  of  lung  power. 

Mayor  Curley.  They  are  crying  for  further  extension, 
and  when  that  is  granted  they  will  cry  for  still  further 
extension. 

Commissioner  Noyes.  Yes,  but  if  the  Transit  Commis- 
sion was  authorized  to  put  a tunnel  to  Fields  Corner  we 
will  say,  they  will  be  very  severely  criticized  for  not  putting 
one  to  Codman  Square. 

Mayor  Curley.  Yes. 

Commissioner  Noyes.  So  that  it  is  very  much  easier  to 
criticize  the  body  that  has  the  authority  and  the  ability  to 
proceed  and  construct  these  tunnels  than  it  is  for  that  body 
to  do  it  to  suit  every  part  of  the  community. 

Mayor  Curley.  My  opinion  is  that  it  would  be  a greater 
protection  to  the  State  and  to  every  part  of  the  district  if 
the  Boston  Transit  Commission  was  permitted  to  adopt  a 
definite  plan  of  construction,  and  have  it  approved  by  the 
Legislature,  or  some  other  body. 

Commissioner  Noyes.  Quite  right. 

]\Iayor  Curley.  And  then  all  the  demands  made  by  the 
improvement  associations  or  any  other  organizations  could 
not  be  of  avail.  You  would  say  that  these  are  the  lines  laid 
down,  and  then  you  would  get  somewhere.  I think  it  ought 
to  be  done. 

Commissioner  Ellis.  You  believe  in  the  creation  of  some 
sort  of  Commission  that  will  have  implied  power  to  study 
the  situation  and  })lan  for  the  future? 

Mayor  Curley.  1 think  the  Transit  Commission  as 


1917.] 


HOUSE  — No.  1875. 


45 


created  should  be  granted  that  right,  but  that  the  final 
adoption  of  a program  for  development  should  be  subject  to 
acceptance  by  some  other  body,  or  by  the  Legislature  for 
instance,  or  by  the  Governor  and  Council,  or  some  such 
body.  I don’t  believe  that  they  should  be  permitted  to 
exercise-  a program  which  would  run  into  hundreds  of  mil- 
lions of  dollars.  If  there  are  no  further  questions,  I will  try 
to  keep  an  11  o’clock  engagement.  I thank  you  very  much, 
gentlemen. 

The  Lieutenant-Governok.  The  Mayor  of  Cambridge. 

Hon.  Wendell  D.  Rockwood,  Mayor  of  Cambridge. 

I think  that  we  are  all  indebted  to  Mayor  Curley  for  the 
very  frank  way  in  which  he  has  discussed  this  matter  before 
you  to-day.  He  certainly  has  given  some  of  us  the  oppor- 
tunity to  see  how  Boston,  which  is  vitally  interested  in  this 
problem  of  transportation,  views  the  matter,  and  I think 
that  Cambridge  is  no  less  interested. 

We  have,  for  many  years,  as  you  all  know,  had  our  diffi- 
culties in  the  way  of  service,  in  the  city,  and  now  that  we 
have  one  of  the  finest  equipped  tunnels  in  the  city,  we  feel 
that  any  impairment  of  sejvice  will  be  of  very  grave  con- 
sideration, and  the  cause  of  protest  on  the  part  of  the 
citizens  of  our  community,  as  well  as  the  outlying  districts 
that  are  served  by  the  transportation  system  that  we  have 
in  our  city. 

This  matter  has  been  referred  to  the  Cambridge  Board  of 
Trade.  I took  this  matter  up  with  the  legislative  committee 
and  the  municipal  committee,  some  weeks  ago,  for  them  to 
give  the  matter  consideration,  and  also  to  advise  with  the 
Mayor. 

It  has  been  impossible  for  them  to  hold  a conference  for 
the  full  consideration  of  the  problem,  as  it  affects  Cambridge, 
and  of  course,  indirectly  the  entire  Metropolitan  district, 
and  I received  yesterday  a communication  from  ’the  com- 
mittee which  is  a joint  committee.  Judge  Walcott  is  chair- 
man of  the  Municipal  Committee,  and  former  (fity  Solicitor 
Mr.  Pevey,  chairman  of  the  Legislative  Committee,  requesting 
that  they  be  given  further  time  for  consideration,  and  in 


46 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 

view  of  that  fact  I feel  that  it  may  be  necessary  to  ask 
permission  from  this  Commission  to  have  some  matters  more 
fully  gone  into  at  some  later  date. 

The  Board  of  Trade,  as  I understand,  are  in  conference 
with  a committee  from  th6  Boston  Chamber  of  Commerce, 
and  while  I am  willing  to  defer  to  their  request  to  have  a 
conference  with  them  in  discussing  this  problem  in  a com- 
prehensive way,  I feel  that  our  committee  is  quite  able  to 
consider  this  matter  without  any  extended  conference  with 
the  Boston  Chamber  of  Commerce,  although  we  have  two 
very  distinguished  representatives  on  the  Boston  Committee. 

I think  in  view  of  some  statements  made  here  to-day  that 
I might  be  justified  or  warranted  in  calling  the  attention  of 
this  Commission  to  one  or  two  matters  which  I have  a per- 
sonal conviction  concerning. 

I think  that  any  plan  of  this  Commission  that  would  affect 
the  service  of  the  Boston  Elevated,  either  in  Cambridge  or  in 
any  other  part  of  the  Metropolitan  district,  would  be  pro- 
tested by  the  people.  I cannot  but  feel  that  any  elimina- 
tion of  present  service  or  reduction  would  be  protested  by 
the  people,  and  I believe  that  Cambridge,  particularly,  would 
feel  keenly  on  that  matter. 

I think  that  any  change  in  the  fares  would'  be  unpopular, 
and  would  arouse  an  intense  opposition.  Several  of  these 
suggestions  along  that  line,  making  changes  in  the  established 
custom  which  has  prevailed  for  years  and  years,  under  which 
a fine  system  has  developed  accommodating  a vast  area, 
would  be  decidedly  unpopular,  and  I feel  that  the  Boston 
Elevate(t,  themselves,  recognize  that  these  suggestions  which 
relate  to  matters  of  this  kind  are  impossible  to  bring  about. 

In  fact,  in  the  hasty  review  of  the  presentation  of  the  case 
in  this  case  before  you,  it  would  seem  as  if  their  argument 
indicated  that  they  thought  that  those  suggestions  were 
im})racticable. 

Right  along  this  line  would  be  the  zone  system  which 
would  make  a change  in  fares  and  also  the  increased  charge 
for  transfers.  All  of  these  would  be  a limiting  of  .serviee,  and 
I believe  — I cannot  conceive  of  the  ])racticability  or  possi- 
bility of  such  changes  as  these  being  adopted  or  even  recom- 
mended with  seriousness. 


1917.] 


HOUSE  — No.  1875. 


47 


There  is  one  matter  that  Mayor  Curley  has  mentioned  that 
I think  should  have  serious  consideration,  and  that  is  in 
regard  to  the  enclosed  areas.  If  he  recalls,  at  one  time 
Dudley  Street  was  a busy  section  of  the  city  and  a shopping 
center,  and  through  the  reconstruction  of  the  service  the 
enclosed  area  was  built  and  the  public  who  had  for  years  and 
years  had  the  privilege  of  transfers  on  the  surface,  and  were 
able  to  do  their  shopping  there,  were  confined  in  the  enclosed 
areas  to  the  very  serious  impairment  of  the  development  of 
that  part  of  the  city.  And  I am  rather  surprised  that 
Mayor  Curley  should  give  voice  to  the  attitude  toward  the 
enclosed  area  that  he  has,  in  view  of  his  observation  in 
regard  to  the  effect  on  the  development  of  the  industrial 
sections  of  the  city  of  Boston. 

Senator  Bates.  Do  you  contend  that  the  people  ought  to 
be  given  two  fares  for  one,  in  order  to  allow  them  to  shop  in 
any  particular  district?  Is  that  what  your  argument  tends 
to? 

Mayor  Rockwood.  The  situation  which  I was  going  to 
bring  out  was  in  regard  to  a matter  of  transfer  in  the  city  of 
Cambridge,  and  I am  not  quite  willing  to  concede  that  giv- 
ing a transfer  slip  on  the  surface,  from  one  car  to  another,  is 
providing  two  fares  for  passengers.  The  fact  is  if  he  has  a 
continuous  ride,  changing  from  one  car  to  another,  while  he 
is  waiting  for  his  car,  the  community  in  which  that  transfer 
is  made  and  which  has  been  built  up  at  this  point  because  of 
a custom  that  has  been  established  and  which  has  been 
profitable  in  the  past,  is  instantly  discontinued  to  the  im- 
pairment of  property  owners  in  that  vicinity,  and  of  capital 
invested  in  trade  in  that  neighborhood.  And  I can  hardly 
believe  that  that  is  fair  treatment  to  a community  that  has 
had  large  development.  And  the  point  that  I have  in  mind 
is  Central  Square,  where  travel  has  developed  to  an  enor- 
mous extent,  and  where  I am  told  to-day,  that  we  have  one 
of  the  largest  transfer  points  on  the  system. 

I know  that  any  attempt  — I am  convinced,  although  I 
am  not  speaking  with  authority  in  the  matter,  but  [ am  con- 
vinced that  any  attempt  to  change  that  system  in  Central 
Square,  Cambridge,  would  result  in  a very  widespread  pro- 


48 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


test  and  dissatisfaction  on  the  part  of  the  traveling  public,  as 
well  as  on  the  part  of  the  property  owners,  and  every  one 
interested  in  the  development  of  property,  in  the  city  of 
Cambridge. 

Commissioner  Allen.  If  I am  not  interrupting  you,  sir, 
I wanted  to  get  clearly  what  you  had  in  mind.  Do  you 
think  that  a transportation  company  can  stand  this  situa- 
tion? A man  in  Boston  living  in  Arlington  should  have  the 
right  to  get  off  at  Central  Square  and  trade  there,  and  then 
the  privilege  of  going  on  to  his  destination? 

Mayor  Rockwood.  No,  I would  not  ask  for  afly  special 
privilege,  but  I say  that  here  is  a custom  which  has  been 
established,  which  has  gradually  grown,  which  has  come 
about  through  the  development  of  a large  transportation 
system,  and  the  public  have  believed  and  had  faith  in  that 
system,  as  one  of  the  finest  in  the  country,  and  have  invested 
their  capital  and  counted  on  the  continuance  of  a policy 
which  is  profitable  to  the  community,  and  without  impair- 
ment to  the  Elevated  Road.  Of  course,  as  Mayor  Curley  has 
pointed  out,  possible  economies  could  be  worked  out  for  the 
Boston  Elevated,  but  I do  not  believe  that  the  economies 
worked  out  for  the  Boston  Elevated  would  anywhere  near 
compensate  them  compared  with  the  loss  to  the  municipality 
and  the  inconvenience  to  the  traveling  public. 

Commissioner  Noyes.  Mr.  Mayor,  as  you  have  described 
it,  isn’t  it  really  a development  of  the  community  by  the 
abuse  of  the  Boston  Elevated?  Take  a concrete  example: 
At  Massachusetts  Avenue,  in  Boston,  we  have  the  Massa- 
chusetts Station.  That  is  a very  large  transfer  point.  It 
provides  transfers  to  cars  going  to  and  from  Cambridge,  and 
going  to  Roxbury  and  in  various  directions,  as  the  President 
of  the  company  will  state  here.  I have,  myself,  watched 
a great  deal  the  use  and  abuse  of  transfers  at  that  point. 
It  is  quite  possible  that  there  are  certain  stores  there,  — 
flower  stores,  — you  are  familiar  with  the  arrangement  there 
probably,  and  I cannot  believe  that  it  is  right,  to  the  trans- 
portation company,  for  a man  to  come  over  from  South 
Boston  and  get  a transfer,  and  get  out  and  do  shopinng 


1917.] 


HOUSE  — Xo.  1875. 


49 


there,  and  then  go  down  into  the  subway.  It  is  an  inter- 
rupted trip,  but  worse  than  that,  he  not  only  gets  his  slip 
and  gets  out,  but  he  gives  it  to  somebody  else,  and  it  is  the 
fact  that  the  open  transfer  station  would  result  in  a great 
deal  of  abuse. 

There  is  one  specific  case  of  that  which  I am  familiar 
with,  although  I am  not  familiar  with  the  Central  Square 
situation,  but  all  over  the  system  I understand  the  transfer 
privilege  is  very  much  abused.  Perhaps  the  community 
thrives  on  it,  but  it  is  not  a proper  practice. 

- Mayor  Rockw^ood.  The  transfer  privilege  may  be  abused, 
but  the  Legislature  has  provided  relief  for  the  Elevated,  and 
if  the  company  needs  more  relief  it  should  be  provided.  It 
is  a custom  which  has  grown  up  as  the  Boston  Elevated  has 
developed  in  this  territory,  and*  beyond,  which  we  feel 
should  be  retained.  I remember  the  time  when  I could  go 
out  from  Charlestown  to  Roxbury  in  the  morning,  and  then 
go  back  again  at  night  on  an  8-cent  check. 

Commissioner  Xoyes.  You  don’t  think  that  was  right 
do  you? 

Mayor  Rockwood.  Xo,  I do  not.  I think  that  was  tak- 
ing* advantage  of  the  road  by  the  public.  However,  it  was 
legal,  because  you  came  back  on  a different  line.  And  that 
was  eliminated  when  the  consolidation  was  effected. 

(k)mmissioner  Ellis.  What  you  have  in  mind  is  that 
some  of  the  jieople  do  use  transfers  legitimately  at  (^entral 
Square,  — for  instance  the  man  who  gets  out  at  Central 
Square  and  walks  over  to  take  a car,  and  while  there  he 
thinks  of  something  and  goes  into  a drug  store  on  one  side 
or  the  general  merchandise  store  on  the  other  to  make  a 
purchase?  That  was  your  idea? 

Mayor  Rockwood.  That  is  my  idea.  1 would  not  favor 
the  abuse  of  a transfer  system,  but  here  is  a custom  that 
has  become  established,  and  tlie  locality  has  developed  in 
proportion  to  the  growth  of  the  system.  And  with  the 
development  of  the  city  it  is  not  all  one  sided.  We  cannot 
be  working  wholly  for  the  Boston  Elevated,  but  we  must 
consider  the  public.  As  Mayor  (’urley  has  ])ointed  out 
clearly,  the  public  has  certain  rights  and  the  community 


50 


BOSTON  ELE\^ATED  RAILWAY. 


[Mar. 


has  certain  rights,  and  tlie  development  is  a part  of  the  de- 
velopment of  an  important  transportation  system,  and  as  we 
de^'elop  the  city,  it  makes  the  transportation  business  more 
profitable.  One  form  of  development  must  go  with  the 
other.  When  we  impair  privileges  in  one  direction,  we  are 
injuring  some  other  section. 

Representative  Donovan.  I would  like  to  ask,  IVIr. 
Mayor,  if  the  abuse  of  this  transfer  system  by  a few  is  any 
reason  why  the  large  majority  should  be  required  to  suffer 
for  it? 

Mayor  Rockwood.  It  is  my  feeling  that  it  should  not. 

Representative  Donovan.  If  there  is  any  way  that  the 
Elevated  can  be  protected  by  law,  to  bring  that  around  in 
better  shape,  you  would  be  in  favor  of  it? 

Mayor  Rockwood.  I ' certainly  would.  I believe  that 
■every  corporation  should  have  adequate  and  proper  pro- 
tection, and  that  no  one  should  be  made  the  subject  of 
abuse  by  the  public  or  by  private  individuals;  that  the 
rights  of  every  corporation  doing  business  should  have 
proper  protection,  and  if  that  has  not  been  accorded  them 
by  the  Legislature,  it  should  be  done. 

Representative  Donovan.  You  believe  that  the  large  j>er- 
centage  of  the  people  who  use  Dudley  Street  and  Central 
Square  do  it  in  a legitimate  manner,  and  honestly? 

Mayor  Rockwood.  I do,  without  question.  I cannot 
conceive  of  any  large  abuse  in  a point  like  Central  Square, 
where  thousands  of  people  transfer  every  day  to  come  in 
town,  and  at  jiight  leave  the  subway  to  take  the  surface 
car  to  go  in  the  opposite  directions. 

Commissioner  Eastman.  What  effect  has  the  closed  trans- 
fer station  at  Harvard  Square  had  on  the  bushiess  section 
there? 

Mayor  Rockwood.  1 think  if  you  had  heard  the  .state- 
mejits  of  busijiess  mcji  located  in  Harvard  Square,  you 
would  be  convijiced  that  it  was  not  to  the  interest  of  that 
part  of  our  city.  Of  cour.se  in  the  reconstruction,  in  the 
buildijig  of  subways  an<l  changing  of  methods,  the  ])ublic  * 
})erhaps  nuust  make  ii])  their  minds  to  take  the  results  that 
are  worked  out,  but  where  there  is  a deliberate  attempt 


1917.] 


HOUSE  — No.  1875. 


51 


made  to  change  customs,  especially  where  they  have  been 
the  means  of  forming  business  centers,  I think  .that  the 
Boston  Elevated  is  not  justified  in  asking  for  any  change 
that  would  impair  the  interests  of  the  community  or  impair 
the  service,  and  it  would  affect  both  I believe,  in  this  par- 
ticular case. 

Commissioner  Macleod.  It  is  also,  to  some  extent,  a 
question  of  policy,  is  it  not,  Mr.  Mayor?  The  situation 
which  you  describe  at  the  Dudley  Street  Terminal  has  been  an 
unfortunate  one  for  the  adjoining  property  owners  at  that 
point,  and  yet  that  would  be  relatively  unimportant  com- 
pared with  the  situation  which  would  exist  in  Cambridge  if 
an  attempt  was  made  to  put  in  a prepayment  area  at  Cen- 
tral Square,  which  is  the.  business  center  of  the  whole  city  of 
Cambridge,  and  practically,  as  matters  now  stand  in  Cam- 
bridge, the  only  portion  of  Cambridge  in  which  there  is  any 
large  amount  of  city  business  done.  And  the  effect  of  put- 
ting in  a prepayment  area  at  that  point  would  be  almost 
revolutionary,  wouldn’t  it,  in  so  far  as  affecting  the  values 
in  the  city  of  Cambridge? 

Mayor  Rockwood.  I think  it  would  make  Cambridge  a 
sort  of  .flag  station. 

Commissioner  Macleod.  Would  you  object  to  a scheme 
under  which  the  Boston  Elevated  Railway  Company  would 
be  permitted  by  legislative  act  to  take  land  for  the  purpose 
of  establishing  enclosed  areas,  subject  to  the  supervision  of 
some  proper  public  body,  which  would  pass  upon  individual 
cases? 

Mayor  Rockwood.  I think  that  if  the  system  is  to  come 
under  the  control  of  some  public  commission,  and  there 
seems  to  be  no  reason,  so  far  as  I can  see  why  the  present 
Public  Service  Commission  should  not  be  given  larger  con- 
trol, that  we  should  probably  have  to  accede  to  their  judg- 
ment in  perha])S  structural  changes  that  may  seem  wise; 
but  I should  feel  that  it  was  my  duty  to  protest  about  any 
changes  which  would  be  contemplated  in  connection  with 
established  customs,  and  with  what  has  a])parently  been 
worked  out  as  a feasible  and  a comprehensive  system  of 
transportation.  And  when  the  Cambridge  subway  was  con- 


52 


BOSTON  ELEVATED  BAILWAY. 


[Mar. 


structed  it  was  built,  and  built  by  the  Boston  Elevated,  too. 
They  laid  that  work  out  and  carried  it  through  in  accordance 
with  just  what  has  been  talked  of  here,  as  I conceive,  of  a 
comprehensive  plan.  They  were  not  under  the  control  in 
regard  to  that  construction,  as  I recall,  of  the  Transit  Com- 
mission. The  Transit  Commission’s  work  has  been  confined 
to  the  city  of  Boston.  If  they  were  satisfied  with  the  plan 
as  they  worked  it  out,  and  saw  the  vision  ahead,  and  saw 
the  possibilities  of  that  branch  of  their  system,  I believe 
that  the  public  should  take  that  in  good  faith,  and  should 
be  protected,  and  that  the  customs  that  they  have  main- 
tained should  be  kept  since  it  does  not  seriously,  so  far  as 
I can  see,  impair  the  finances  of  the  company,  and  is  a very 
large  accommodation  to  the  public;  not  only  to  the  city  of 
Cambridge  but  to  the  outlying  districts  which  we  must  con- 
sider in  connection  with  the  interest  of  the  city  of  Cam- 
bridge. 

The  other  matters  that  have  been  suggested  in  the  report 
of  the  Boston  Elevated  Company  before  you  are  matters 
that  may  need  to  be  taken  up  possibly  and  discussed  at 
somie  later  date,  if  you  are  gracious  enough  to  give  us  the 
opportunity. 

There  is  one  matter  that  I would  like  to  express  my  per- 
sonal feeling  in  regard  to,  and  that  is  concerning  the  Cam- 
bridge subway.  The  Boston  subways  are  owned  by  the  city 
of  Boston.  The  suggestion  has  been  made  here  that  the 
Cambridge  subway  be  taken  over  by  the  State.  That  seems 
to  be  bringing  out  the  same  confusion  and  jumbled  situation 
that  has  been  mentioned  as  existing  in  the  development  of 
the  system. 

I believe  that  when  that  matter  comes  before  you,  if  it 
comes  before  you  for  serious  consideration,  that  the  city  of 
Cambridge  is  entitled  to  first  consideration;  and  that  they 
should  be  conferred  with  and  advised  with  in  regard  to  their 
j)ossible  attitude  in  this  im])ortant  matter. 

We  feel  that  the  Cambridge  subway  is  a matter  of  suj)reine 
interest  to  the  citizens  of  ('ambridge,  and  if  the  idea  of  the 
( 'ojnmission  is  to  have  .some  com})rehensive  working  j)lan,  it 
would  seem  to  me  that  if  the  Bo.ston  subways  are  to  be  main- 


1917.] 


HOUSE  — No.  1875. 


53 


tained  as  they  are  at  the  present  time  by  the  city,  that  the 
city  of  Cambridge  which  is  directly  interested  should  be 
treated  in  some  way  by  which  their  wishes  and  desires  may 
be  considered  before  the  matter  of  State  consideration  comes 
before  you. 

Commissioner  Macleod.  We  should  like,  I think,  Mr. 
Mayor,  to  have  something  pretty  definite  on  that  matter  as 
far  as  indicating  a definite  policy  on  the  part  of  the  city  of 
Cambridge,  either  to  do  something  or  to  do  nothing,  under 
that  act.  Personally,  from  what  I know  of  the  situation  in 
the  city  of  Cambridge,  it  has  never  seemed  to  me  that  there 
was  the  remotest  possibility  of  the  city  of  Cambridge  ever 
attempting  to  take  the  subway  over  under  the  provisions  of 
the  Subway  Act,  which  would  necessitate  taking  over  of  the 
subway  at  a price  which  would  be  absolutely  out  of  reason. 

The  Lieutenant-Goveknor.  Perhaps  we  can  dispose  of 
that  in  this  way:  The  city,  of  Cambridge  does  not  care 
whether  the  Commonwealth  or  the  Boston  Elevated  own 
that  subway  to-day,  provided  that  their  right  to  take  it  to- 
morrow under  the  same  conditions  which  are  imposed  now, 
are  maintained. 

Mayor  Rockwood.  Possibly  they  may  be  unable,  legally, 
to  object  to  any  transfer  in  title,  but  I believe  that  they  feel 
that  they  have  first  claim  in  consideration  of  any  change  in 
ownership,  of  that  subway,  and  if  it  seems  advisable  to  you, 
gentlemen,  to  recommend  the  suggestion  or  to  endorse  the 
suggestion  made  by  the  Boston  Elevated,  in  order  to  furnish 
them  with  some  added  available  capital  for  extending  the 
equipment,  I think  that  Cambridge  will  be  in  a position  to 
express  itself  and  state  how  it  feels  in  regard  to  this  matter. 
Personally  I believe  that  the  city  of  Cambridge  is  interested 
in  this  subject. 

Commissioner  Macleod.  Well,  I should  assume  that  if 
there  was  any  intention  on  the  part  of  the  city  of  Cambridge 
to  seriously  consider  taking  over  the  Cambridge  subway,  you 
would  want  some  legislation  fixing  the  j)rice  at  which  it 
should  be  taken  over,  at  some  different  basis  from  that  which 
exists  in  the  act  at  the  y)resent  time. 

Mayor  Hockwood.  I shall  be  glad  to  take  this  matter  u]) 


54 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


with  your  Board,  and  have  gentlemen  who  are  interested 
in  this  matter  present,  and  have  some  comprehensive  con- 
sideration given  to  this  particular  subject.  This  is  a rather 
large  matter  to  discuss,  and  I have  not  had  the  oppor- 
tunity to  confer  with  those  who  are  interested  in  this  matter, 
as  fully  as  I desire,  and  the  Board  of  Trade  have  asked  for 
time  to  give  this  matter  consideration.  That  is  one  reason, 
why  we  are  not  in  a position  to-day  to  make  any  statements 
that  Would  be  for  your  use  perhaps  at  the  present  time. 

Commissioner  Eastman.  Mr.  Mayor,  the  proposition 
made  by  the  Elevated  is  that  the  State  shall  purchase  the 
Cambridge  subway  at  cost.  Is  it  your  idea  that  the,  city  of 
Cambridge  may  desire  to  purchase  the  subway,  itself,  upon 
these  terms? 

]\Iayor  Bockwood.  I would  be  unable  to  say,  sir,  to-day, 
as  to  what  the  city  of  Cambridge  might  be  willing  to  do. 
However,  we  should  like  to  have  the  privilege  given  to  us, 
to  have  this  matter  thoroughly  discussed  and  sound  out 
public  feeling  in  the  matter,  and  have  a group  of  representa- 
tive men  meet  with  your  Board,  and  go  into  it  more  fully  in 
the  near  future. 

The  Lieutenant-Govp:rnok.  Isn’t  this  your  idea:  that 
you  want  to  have  Cambridge  maintain  the  same  right  to 
take  the  subway  in  the  future  that  it  has  to-day? 

]\layor  Bockwood.  I should  object  to  any  attemj)t  on 
the  part  of  the  Legislature  to  take  away  the  privilege  that 
the  city  has,  of  buying  that  subway,  the  ])rivilege  as  provided 
in  the  act  tliat  permitted  its  construction.  If  we  can  make 
some  change  through  your  Board  and  the  Legislature,  which 
would  make  it  easier  for  the  city  to  handle  the  matter,  I am 
sure  that  if  we  contem])late  the  ])urchase  of  the  subway  that 
we  should  apju’cciate  that.  I think  from  the  chairman’s 
[Commissioner  ]\Iacleod]  remarks,  you  ])erhaps  understand 
that  there  are  certain  conditions  there  which  he  thinks  are 
rather  serious  obstacles  in  the  way  of  a(*(piiring  the  property. 

('ommissioner  Macleod.  This  matter  which  is  before  us 
is  in  reference  to  some  ]>rogram  of  immediate  relief  for  the 
Elevated  ('omj)any,  and  the  indefinite  j)ossibility  that  the 
city  of  ('ambridge  niight  take  the  subway  over  some  years 


1917.] 


HOUSE  — No.  1875. 


55 


hence  would  not  be  anything  very  constructive  at  the  pres-- 
ent  time.  It  seems  to  me  that  the  situation  is  one  where 
some  rather  early  and  definite  conclusion  on  the  part  of  the 
city  of  Cambridge  ’would  be  desirable,  if  it  can  be  had. 

Commissioner  Noyes.  Would  it  be  fair,  Mr.  Chairman, 
to  ask  the  Mayor  what  date  would  be  agreeable  to  him  to 
present  those  views? 

Mayor  Rockwood.  I shall  be  glad  to  take  this  matter 
up  at  an  early  date,  with  those  who  are  interested,  and 
accommodate  your  Board,  if  it  is  convenient  to  you,  to  have 
a hearing  on  this  matter  at  an  early  date. 

The  Lieutenant-Governor.  Who  is  there  that  is  inter- 
ested? 

Mayor  Rockwood.  I believe  that  every  man,  woman  and 
child  in  Cambridge  is  interested. 

Commissioner  Noyes.  ArenT  you  as  Mayor  authorized 
to-day  to  state  the  position  of  the  city  of  Cambridge? 

Mayor  Rockwood.  Personally,  I think  that  the  Mayor 
could  take  a stand  in  this  matter.  I think,  however,  out  of 
deference  to  men  who  have  studied  this  situation  for  years, 
and  w^e  have  some  gentlemen  here  who  were  interested  at 
the  time  the  subway  was  constructed  — I think  that  we 
should  have  this  matter  given  full  and  serious  consideration, 
and  at  the  present  time  that  the  Mayor  would  hardly  be 
justified,  particularly  in  view  of  the  fact  that  he  must  have 
the  support  and  active  co-operation  of  men  who  have  not 
yet  had  an  opportunity  to  work  out  this  new  problem, 
which  is  a changed  phase  of  the  situation,  — in  expressing 
his  opinion  in  regard  to  this  particular  matter. 

The  Lieutenant-Governor.  What  difference  could  it 
make  to  the  inhabitants  of  Cambridge  if  we  suggest  legisla- 
tion which  is  adopted,  and  after  that  legislation  has  been 
adopted  the  city  of  Cambridge  has  the  same  rights  to  take 
the  subway  that  it  has  now? 

Mayor  Rockwood.  The  point  that  I was  trying  to  make 
clear  is  that  if  any  change  in  ownership  is  contem])lated  in 
line  with  this  suggestion  here,  that  Cambridge  be  given  the 
first  consideration.  This  matter,  as  I understand  it,  would 
be  submitted  to  the  Legislature  with  the  recommendation 


56 


BOSTON  ELFA\\TED  1{AILAYAY. 


[Mar. 

that  it  be  taken  over  by  either  a metropolitan  board  or  by  a 
State  board,  and  owned  and  conducted  in  the  same  way  as 
our  park  system.  I think  that  before  that  is  done  Cambridge 
ought  to  be  given  an  opportunity  to  be  heard  on  this  matter 
definitely. 

We  are  here  to-day,  as  I understand  it,  discussing  the 
general  proposition,  and  here  is  a specific  problem  that 
presents  itself  which  is  of  vital  interest  to  the  city  of  Cam- 
bridge; and  since  it  is  of  so  much  importance,  we  would  like 
the  opportunity  to  be  heard  as  to  what  Cambridge  would  be 
willing  to  do  in  regard  to  this  matter. 

The  Lieutenant-Governor.  I think  perhaps  you  don’t 
understand  me,  Mr.  Mayor.  You  come  here  with  certain 
rights  which  the  Legislature  has  given  to  the  city  of  Cam- 
bridge, to  take  the  Cambridge  subway.  Now,  at  the  present 
time  the  Elevated  Company  owns  it.  Would  it  make  any 
difference  to  the  city  of  Cambridge  if  that  ownership  should 
be  changed  so  that  the  State  should  own  it,  provided  that 
the  city  of  Cambridge  will  have  the  same  right  to  take  the 
subway  that  it  has  now? 

Mayor  Rockwood.  I think  it  would. 

The  Lieutenant-Governor.  That  is  what  I wanted  to 
know;  what  would  the  difference  be? 

Mayor  Rockwood.  I think  that  we  might  lose  control  of 
some  conveniences,  the  same  accommodation  that  we  have 
at  the  ])resent  time.  If  that  matter  was  taken  over  by  a 
commission  and  they  decided  that  certain  service  could  be 
eliminated,  to  make  it  profitable  to  the  Boston  Elevated, 
they  would  order  that  eliminated. 

That  certainly  would  interest  the  city  of  Cambridge.  If 
the  city  of  (’ambridge  owned  the  Cambridge  subway  and 
they  decided  that  they  wanted  an  improvemejit  made  or 
added  service,  and  the  condition  of  the  lease  that  existed 
between  the  city  and  the  Elevated  was  such  that  they  could 
ask  for  it,  then  they  would  have  the  right  to  present  their 
needs,  and  have  them  considered.  If  it  is  outside  of  their 
control  and  goes  into  alien  hands  or  into  the  hands  of  some 
one  who  is  not  ])articularly  ijiterested  in  the  jieeds  of  our 
community,  we  feel  that  we  would  not  have  as  large  a con- 


1917.] 


HOUSE  — No.  1875. 


57 


trol  of  the  situation  as  we  would  at  the  present  time,  with 
the  supervision  that  is  given  the  Boston  Elevated.  We  know 
where  we  stand  to-day.  We  would  not  know  if  that  change 
was  made  which  might  be  contemplated  by  this  recommenda- 
tion. 

Commissioner  Wacleod.  I suppose  it  is  your  idea  also 
that  if  the  city  of  Cambridge  were  to  purchase,  it  ought  to 
have  the  privilege  of  purchasing  on  as  favorable  terms  as  the 
Com:monwealth  would  purchase,  under  the  terms  proposed 
for  the  resolve. 

Mayor  Rockwood.  It  certainly  should. 

Chairm.an  Macleod.  What  would  you  think  of  the  sug- 
gestion of  an  act  providing  authority  for  the  city  of  Cam- 
bridge to  purchase  this  subway  at  cost  within  a certain 
limited  period  of  time,  and  in  the  absence  of  action  by  the 
city,  within  that  stipulated  period,  that  the  subway  should 
be  taken  over  by  the  State? 

iMayor  Rockwood.  That  probably  would  be  a fair  propo- 
sition if  proper  machinery  was  provided  by  the  Legislature, 
so  that  it  could  be  given  consideration.  If  the  Legislature 
saw  fit  to  appoint  a board  or  commission  to  give  this  matter 
consideration,  and  then  a definite  time  in  which  the  m^atter 
could  be  consummated,  without  imipairing  the  rights  as  they 
exist  at  the  present  time,  I should  think  that  that  would  be 
constructive  along  the  line  of  opening  up  an  opportunity  to 
the  city. 

Commissioner  Noyes.  Mr.  Mayor,  would  not  the  service 
of  the  subway,  whether  owned  by  the  city  of  Cambridge  or 
by  the  Commonwealth,  or  by  the  Boston  Elevated  Railway 
Company,  always  be  under  the  jurisdiction  of  the  Public 
Service  Commission,  the  character  of  which  you  are  familiar 
with,  and  with  which  I think  you  probably  feel  satisfied?  I 
don’t  see  that  the  change  in  the  title  of  the  subway  would 
contemplate  any  change  in  the  service.  I don’t  think  that 
this  resolve  contemplates  that,  or  that  any  member  of  the 
Commission  has  contemplated  that,  but  that  is  merely  a 
suggestion  which  has  come  in  from  the  Elevated  Road,  and 
approved  by  the  mayor  of  Boston,  as  one  means  of  giving 
relief  to  the  company,  for  the  State  to  take  over  the  (kim- 
bridge  subway  at  a cost  to  be  decided  on  by  somebody. 


58 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commissioner  Noyes.  As  my  colleague,  Mr.  Ellis,  has 
said  in  a low  voice,  he  always  supposed  the  city  of  Cambridge 
had  the  option  to  purchase,  and  that  would  be  its  privilege. 
That  if  it  was  not  ready  to-day  to  take  it  over,  it  would  always 
have  the  opp'ortunity  to  do  so.  Would  the  position  of  Cam- 
bridge change  the  least  bit  under  those  conditions? 

Mayor  Rockwood.  If  you  could  guarantee  that  there 
would  be  no  impairment  of  the  interest  of  the  city  — 

Commissioner  Noyes.  That  is  impossible.  Air.  Mayor, 
but  I should  suppose  that  the  Public  Service  Commission 
would  be  able  to  control  it.  We  cannot  guarantee  it. 

Mayor  Rockwood.  We  are  quite  satisfied  with  the  pres- 
ent existing  conditions.  If  we  say  yes  to  some  proposed 
change,  not  knowing  exactly  how  that  proposed  change  will 
be  worked  out,  we  are  taking  certain  chances,  that  I think 
we  are  not  warranted  in  taking,  in  view  of  the  fact  that  we 
have  an  existing  condition  that  is  satisfactory. 

President  Wells.  If  a sufficient  time  was  given  to  the 
committee,  would  they  be  able  to  decide  that  question? 

jNJayor  Rockwood.  I think  we  can  come  in  with  definite 
suggestions  to  this  committee  in  regard  to  this  particular 
matter  in  the  very  near  future. 

President  Wells.  What  do  you  mean  by  “definite  sugges- 
tions”? I mean,  in  answer  to  the  question  which  Mr.  Noyes 
put,  that  you  did  not  desire  to  say  “Yes”  to  that,  because 
you  did  not  know  how  the  conditions  might  work  out.  How 
much  time  would  you  need  to  decide  whether  you  could  say 
“yes”  to  the  proposition,  not  knowing  how  it  would  work 
out? 

Mayor  Rockwood.  I think  we  would  like  to  make  sugges- 
tions along  the  line  of  how  this  ])roblem  would  work  out, 
j)rovided  the  city  could  take  advantage  of  the  option,  which 
might  be  true  in  the  recommendation  of  this  Commission. 
I am  not  ])repared  to-day  to  give  you  a continuous  outlined 
l)lan  in  the  way  of  suggestion  that  would  be  })erhaj)s  the  — 

President  Wells.  Has  your  committee  or  the  two  com- 
mittees which  you  referred  to  started  or  begun  working  on 
any  definite  ])lan  as  yet? 

Mayor  Rockwood.  They  have  held  one  meeting  within 
the  last  few  days. 


1917.] 


HOUSE  — Xo.  1875. 


59 


President  Wells.  They  have  held  one  meeting  within  the 
last  few  days? 

Mayor  Rockwood.  Yes. 

President  Wells.  And  they  have  had  those  documents  in 
their  possession  since  last  September? 

^Jayor  Rockwood.  I turned  this  matter  over  to  them 
some  time  ago,  I will  admit. 

Commissioner  Noyes.  September  26. 

President  Wells.  Do  you  know  whether  that  one  meet- 
ing produced  any  form  of  suggestion  or  plan? 

Mayor  Rockwood.  I shall  be  glad  to  have  the  secretary 
and  the  president  of  the  Cambridge  Board  of  Trade,  who  are 
present,  answer  questions  along  that  line.  They  can  speak 
with  more  authority  and  also  perhaps  answer  more  fully  the 
question  which  you  have  raised  about  the  speed  of  action  on 
their  part. 

The  Lieutenant-Governor.  If  there  is  no  objection  we 
will  take  that  up  at  a later  time. 

Mayor  Rockwood.  There  is  one  other  matter  which  I 
would  like  to  call  your  attention  to.  If  the  Boston  Elevated 
has  made  a case  which  you  believe  is  fair,  and  that  they  are 
entitled  to  relief  in  some  form,  and  if  the  suggestion  of  Mayor 
Curley  that  some  reduction  in  the  franchise  tax  or  some  as- 
sessment on  the  metropolitan  district  would  be  the  provision 
that  would  relieve  the  situation,  I hope  that  you  will  consider 
in  connection  with  that,  that  the  cities  and  towns  and  par- 
ticularly Cambridge,  for  which  I am  speaking,  is  obliged  to 
stand  a portion  of  the  loss  that  they  would  be  obliged  to 
take  in  the  way  of  reduced  franchise  tax,  that  it  should  be 
some  sort  of  a cumulative  charge,  because,  so  far  as  I can 
legrn,  the  Boston  Elevated  has  confidence  in  the  future;  that 
the  time  is  coming  when  these  matters  which  have  been 
somewhat  getting  ahead  ])ossibly  of  travel,  or  not  warranted 
by  travel,  are  going  to  have  enough  revenue  to  take  care  of 
all  their  obligations  and  make  their  stock  and  bonds  of  a 
market  value  perhaps  that  existed  some  years  back.  And  if 
relief  is  given  through  any  medium  or  plan  which  you  have 
under  contemplation  and  particularly  where  it  affects  cities 
and  towns,  that  that  should  be  a cumulative  charge,  ajid  that 


BOSTON  KLFN  ATED  RAILWAY. 


[Mar. 


()() 

as  fast  as  the  revenues  of  the  company  warrant  them,  that 
cumulative  charge  should  be  returned  to  the  communities 
who  have  had  to  stand  their  share  of  relief.  I think  that 
covers  practically  all  of  the  points  which  I have  at  just  this 
moment. 

Commissioner  Eastman.  Mr.  Mayor,  I should  like  to  ask 
you  the  same  question  which  I asked  Mayor  Curley.  If  the 
risk  of  this  enterprise  is  taken  from  the  stockholders  and 
placed  upon  the  cities  and  towns,  with  a possible  reduction 
in  taxes,  do  you  think  that  the  cities  and  towns  ought  to 
have  any  voice  in  the  management  of  the  road? 

Mayor  Rockwood.  I think  that  we  can  very  well  leave 
that  with  the  present  Commission,  with  the  enlargement  of 
powers.  I think  that  there  are  means  — that  they  will  look 
after  the  interests  of  this  community  or  the  metropolitan 
community  in  the  way  that  has  been  quite  satisfactory  in  the 
past.  And  in  view  of  the  experience  that  the  various  com- 
munities have  had  with  the  Commission,  I see  no  reason 
why,  with  the  enlarged  powers  to  protect  the  interest  of  all 
the  local  communities,  that  the  matter  could  not  be  well  left 
as  it  is  at  present. 

Commissioner  Eastman.  What  powers  do  you  think 
ought  to  be  enlarged? 

Mayor  Rockwood.  Whatever  powers  do  not  exist  at  the 
present  time  that  would  protect  the  interest  of  those  who 
are  interested  by  the  change  of  ownership  or  the  changed 
condition  of  the  company.  That  is,  those  powers  should  be 
increased  in  proportion  to  the  accoujitability  to  the  com- 
mimity  that  might  result  as  ])art  of  the  proposed  change 
and  plan  existing  at  the  present  time. 

We  have  present  the  president  of  the  Board  of  Trade  and 
the  secretary  of  the  Board  of  Trade,  Mr.  Pevey,  who  is 
chairman  of  the  Legislative  ('ommittee.  One  of  our  most 
])rominent  bankers,  Mr.  P'arle,  is  present,  and  if  any  of  these 
gentlemen  care  to  su])plement  or  make  new  suggestions  on 
anything  that  has  been  said  by  the  Mayor,  I shall  be  pleased 
if  you  will  hear  them. 


1917.] 


HOUSE  — No.  1875. 


(U 


Hon.  Walter  C.  Wardivell,  President  of  the  Cambridge  Board 

of  Trade. 

I have  the  honor  to  be  president  of  the  Board  of  Trade 
which  His  Honor  the  Mayor  has  mentioned,  and  Mr.  Pevey, 
former  city  solicitor,  is  chairman  of  the  Joint  Special  Com- 
mittee of  the  Board  of  Trade,  who  will,  I assure  you,  dig 
into  the  thing  and  report  as  soon  as  possible.  I sincerely 
hope,  gentlemen,  that  you  will  give  the  people  of  Cambridge 
who  are  vitally  interested  in  this  matter  an  opportunity  to 
fully  and  carefully  discuss  it.  If  you  don’t,  I am  afraid  you 
will  raise  ructions.  I believe  it  is  a matter  which  we  cannot 
jump  into  in  a very  few  minutes.  The  Special  Committee 
has  had  the  data  that  you  have  referred  to  only  a day  or 
two,  and  they  are  ready  and  willing  to  give  this  matter  a 
great  deal  of  time  and  consideration.  The  Board  of  Trade  of 
Cambridge  will  certainly  give  it  a great  deal  of  time  and  con- 
sideration. 

I share  very  strongly  some  of  the  convictions  which  His 
Honor  the  Mayor,  has  expressed  to  you,  but  at  the  same 
time  I do  not  feel  that  at  this  time  we  are  quite  ready  to 
object,  as  we  may  be  later.  I simply  would  like  to  say  that 
we  want.  Your  Honor,  all  the  rights  in  the  subway  that  we 
now  have,  and  as  much  more  as  we  properly  should  have. 
We  don’t  want  you  to  make  Cambridge  a flag  station.  When 
the  subway  was  built  or  planned,  we  thought  it  was  designed 
for  the  city  of  Cambridge,  but  there  are  only  a few  of  us  now 
that  can  get  into  it.  It  accommodates  the  gentlemen  in 
Arlington  and  beyond,  in  Watertown  and  beyond,  at  Har- 
vard Square  and  its  vicinity,  and  Central  Square  and  its 
vicinity,  but  the  rest  of  us  have  to  hoof  it  part  way  to  Bos- 
ton, before  we  can  get  ijito  it. 

I did  not  intend  to  say  as  much  as  1 have  said.  1 would 
like  to  have  Mr.  Pevey,  who  was  city  solicitor  during  the 
time  that  we  struggled  with  this  question  some  years  ago, 
and  who  was  chairman  of  this  Special  Commission,  heard  by 
you  now.  1 hope  you  will  give  the  citizens  of  (’ambridge, 
and  the  citizens  of  Boston,  every  oi)})ortunity  to  discuss  this 
thing,  and  as  the  gentleman  over  there  [President  Wells] 


BOSTON  ELE^^ATE1)  RAILWAY. 


[Mar. 


()2 


somewhat  impatiently  wanted  to  know  how  soon  we  could 
have  our  report  ready,  I believe  there  are  many  matters 
which  are  before  you^  gentlemen  which  must  receive  your 
consideration  before  you  can  come  to  a definite  conclusion  as 
to  what  will  be  done  with  the  rights  of  the  citizens  of  the 
town  of  Boston  and  the  town  of  Cambridge. 

President  Wells.  I may  have  shown  impatience,  but  the 
Commission  is  perfectly  willing  to  give  ample  opportunity 
to  every  citizen  of  Cambridge  and  every  citizen  of  the  city 
of  Boston  to  come  forward  here.  ^Vly  point  in  asking  the 
cpiestion  is  this:  This  information  was  before  the  Commis- 
sion the  last  of  September,  and  the  documents  and  papers 
were  sent  to  the  city  solicitor  of  Cambridge  on  September  26. 
We  had  a hearing  scheduled  here  two  weeks  ago,  at  which 
the  Mayor  of  Boston  and  the  ]\Iayor  of  Cambridge  were  sup- 
posed to  be  present  and  speak.  We  were  obliged  to  adjourn 
that  hearing  until  to-day,  in  their  absence,  and  now  the 
Mayor  of  Cambridge  comes  in  and  asks  for  further  time. 

We  are  willing  to  give  that  time,  but  if  Cambridge  re- 
quires a large  numiber  of  meetings  before  it  can  form  its  con- 
clusion, it  is  about  time  that  they  began  holding  them. 
That  is  why  I asked  my  question. 

^Nlr.  Waedell.  The  ^Mrtyor  of  Cambridge  was  iq)  here 
and  some  more  of  us  were  here,  but  the  meeting  of  the  (Com- 
mission had  adjourned,  so  we  had  to  adjourn. 

(Commissioner  Noyes.  What  I meant  to  suggest  was  that 
the  Mayor  of  Cambridge  was  probably  j)repared  a week  or  two 
weeks  ago.  In  the  meantime  we  had  hoi)ed  that  your  Board 
of  Trade  and  Special  CCommittee  had  had  a chan(*e  to  get 
together,  and  get  some  concrete  evidence  and  arrive  at  some 
decision  on  the  position  of  (kniibridge  in  the  matter. 

.Mr.  Wakdell.  I can  only  say  that  we  have  not.  And 
so  far  as  the  Board  of  Trade  is  concerned,  the  matter  has 
only  recently  been  brought  to  our  attention.  And  1 feel 
<piite  confident  that  this  joint  committee  of  the  Board  of 
Trade  will  give  the  matter  immediate  and  ])r()mj)t  atten- 
tion. 

(C()nimissi()iuT  Ellis.  When  do  you  think,  Mr.  Wardwell, 
you  will  be  able  to  have  a definite  opinion  on  the  subject? 


1917.] 


HOUSE  — No.  1875. 


63 


Mr.  Wardwell.  Oh,  I imagine,  in  two  or  three  weeks. 
Mr.  Pevey,  perhaps,  could  answer  that  question  better  than 
I could,  because  he  has  the  matter  in  hand. 

The  Lieutenant-Governor.  Now  we  will  hear  from  Mr. 
Pevey. 

Mayor  Rockwood.  Mr.  Chairman  — 

The  Lieutenant-Governor.  I said  we  would  hear  from 
Mr.  Pevey,  Mr.  Mayor. 

Mayor  Rockwood.  I would  like  to  make  the  suggestion, 
and  then  I will  give  way  to  Mr.  Pevey,  that  if  you  will  give 
us  a further  hearing  we  might  at  that  time  come  entirely 
qualified  and  prepared  to  present  the  case  as  it  will  be  put 
up  to  you  finally  at  that  time  rather  than  to  take  up  your 
time  to-day. 

The  Lieutenant-Governor.  We  will  give  you  a chance 
to  be  heard,  of  course,  to  any  length  that  you  wish. 


Gilbert  A.  A.  Pevey,  Esq. 

i\Jr.  Chairman  and  Gentlemen,  1 am  chairman  of  the 
Legislative  Committee  of  the  Board  of  Trade  of  Cambridge, 
and  Judge  Walcott  is  chairman  on  the  Committee  of  Muni- 
cipal Affairs.  I have  had  several  conferences  in  regard  to 
this  matter,  with  the  Mayor,  and  also  with  Judge  Walcott. 
I was  here  some  two  weeks  ago  when  this  matter  was  ad- 
journed, and  got  in  here  just  as  it  was  announced  that  the 
meeting  was  adjourned,  and  so  I had  no  opportunity  to  say 
anything  because  your  meeting  was  closed. 

I have  not  anything  to  state  officially  to-day.  We  have 
had  one  meeting  of  our  general  committee,  of  which  I was 
made  chairman,  and  we  have  adjourned  that  meeting  to  a 
time  next  week,  and  in  the  meantime  we  propose  to  confer 
with  other  people  interested,  and  have  a session  within  a 
week,  and  more  than  one  session  if  necessary. 

I understand  that  the  Board  of  Trade  could  place  this 
matter  upon  their  calendar  for  regular  business  at  the  next 
meeting,  which  is  the  22d  of  this  month,  and  immediately 
after  that  1 think  we  would  be  able  to  give  you  some  assist- 
ance. We  are  desirous,  gentlemen,  to  help  out  if  we  can,  in 
solving  this  problem. 


04 


BOSTON  ELEVATED  BAILWAY. 


[Mar. 


This  is  a large  problem  and  one  which  very  vitally  interests 
the  city  of  Cambridge,  not  only  in  the  matter  of  the  possible 
purchase  of  the  subway  by  the  State,  or  any  other  authority, 
but  in  every  other  matter  which  has  been  brought  forth  by 
the  Elevated  Railway  in  their  argument. 

The  question  of  the  increase  in  fares,  the  question  of  a 
place  in  the  street  where  bodily  transfers  can  be  made,  the 
enclosed  area,  the  question  of  franchise  tax  and  a compensa- 
tion tax,  a certain  amount  of  which  w^e  get  now  or  the  city  of 
Cambridge  gets  now,  and  would  get  a lesser  amount  if  the 
suggestion  of  the  Elevated  Railway  were  followed  out,  as  set 
forth  in  their  argum.ent.  All  of  those  things  are  of  vital  in- 
terest to  the  citizens  of  Cambridge,  especially  so,  as  we  have 
this  subway  running  through  there,  and  we  accommodate  a 
large  number  of  people,  too,  and  we  want  an  opportunity  to 
fairly  consider  them. 

The  questions  put  forth  in  this  elaborate  and  skillful  argu- 
ment of  the  Elevated  Railway  require  a good  deal  of  thought 
and  attention.  And  no  man  can  hope  to  solve  this  situation 
unless  we  have  proper  time  to  consider  it.  That  is  all  we 
ask,  that  we  may  have  a reasonable  length  of  time  to  present 
to  you  some  views  on  how  we  feel. 

Commissioner  Ellis.  Couldn’t  the  Board  of  Trade  hold 
a special  meeting  on  this  matter? 

Mr.  Pevey.  Yes,  sir,  but  this  joint  committee  are  now 
actually  considering  it.  They  are  waiting  to  get  some  sug- 
gestions from  this  committee.  The  Board  of  Trade  as  a 
whole  could  not  give  their  attention  to  it,  to  the  extent  that 
this  special  committee  are  giving  now,  and  this  Board  of 
Trade  as  a whole  are  looking  forward  to  this  information 
which  these  two  committees  may  give  it. 

(’ommissioner  ]\Iacleoi).  Have  you  any  definite  sugges- 
tion to  make,  ]Mr.  Pevey,  as  to  the  date  when  in  your  judg- 
ment it  would  be  agreeable  to  present  the  matter  to  this 
(’ommission? 

Mr.  Pp:vey.  1 should  say  .some  date  following  the  next 
meeting  of  the  Board  of  Trade,  which  1 understand  is  the 
22(1  of  this  month. 

('ommissioner  Macleod.  Som{‘  date  during  the  last  wet'k 
in  November? 


1917.] 


HOUSE  — Xo.  1875. 


65 


Mr.  Pevey.  Yes,  sir,  or  the  first  week  in  December.  We  • 
propose  to  go  on  very  carefully,  giving  it  continuous  con- 
sideration. We  may  not  be  able  to  assist  you,  but  we  hope 
to  be  able  to  give  you  some  information  that  may  make  you 
think,  at  least. 

The  Lieutenant-Governor.  We  have  to  report  on  the 
15th  of  January. 

Mr.  Pevey.  We  have  no  desire,  ]\lr.  Goolidge,  to  post- 
pone this  matter  or  to  hamper  your  Commission  in  making 
its  report,  but  we  do  think  it  is  a very  vital  matter.  I have 
not  had  this  document  in  my  possession  but  about  ten  days. 

I don’t  know  whose  fault  it  was  that  I did  not  get  it  before, 
but  the  argument  of  the  Railway  has  not  reached  my  hands 
or  the  hands  of  the  committee  until  very  recently,  and  I 
understand  that  is  true  also  of  the  Committee  on  Municipal 
Affairs.  So  that  we  have  not  in  these  ten  days  had  a chance 
to  give  the  matter  the  consideration  which  it  deserves.  It  is 
a very  important  situation. 

Commissioner  Macleod.  You  knew  that  the  Elevated 
submitted  this  case  here  two  months  ago. 

^Ir.  Pevey.  I knew  that,  but  there  are  certain  prelimi- 
naries to  go  through  by  the  Board  of  Trade,  in  order  to 
reach  its  several  committees,  and  of  course  they  took  time. 

President  Wells.  The  22d  of  N^ovember  is  on  a Wednes- 
day. Is  it  your  intention  to  present  a formulated  plan  on  the 
22d,  to  the  Board  of  Trade?  Does  your  committee  expect 
to  finish  its  work  so  as  to  submit  a definite  })lan  on  the  22d 
to  the  Board  of  Trade? 

]Mr.  Pevi:y.  I don’t  know  how  much  we  can  do  within 
that  time,  but  we  shall  do  all  we  can.  If  we  have  further 
time,  we  shall  give  it  further  attention.  It  all  depends  on 
what  this  Commission  does. 

President  Wells.  What  I was  getting  at  was  whether  if 
we  scheduled  a meeting  of  this  Commission  for  Friday,  the 
24th  of  November,  whether  you  would  not  be  ready  at  that 
time  in  view  of  the  fact -that  the  Board  of  Trade  meeting 
occurs  on  the  22d  of  November. 

Mr.  Pevey.  We  will  do  the  best  we  can. 

Presdderit  Wells.  If  your  committee  should  report  to  tlie 
Board  on  the  22d  of  November  — 


BO^TOy  ELE^  ATEI)  KAILWAY. 


[Mar. 


G() 


Mr.  Peyey.  We  will  do  the  best  we  can,  and  if  we  are 
not  ready  then,  we  will  ask  for  further  time  if  it  is  necessary, 
but  I should  think  the  following  week  would  be  better  than 
making  it  on  Friday. 

President  Well^.  That  is  Thanksgiving  week. 

Mr.  Peyey.  That  is  unfortunate,  too. 

President  Wells.  Would  the  following  Tuesday  be  any 
better  for  you? 

Mr.  Peyey.  Yes,  that  would  help  out  materially. 

Commissioner  Noyes.  Does  your  committee,  Mr.  Pevey, 
want  more  copies  of  the  documents? 

Mr.  Peyey.  I think  every  member  now  of  our  committee 
lias  received  a copy  of  the  argument.  That  is  all  we  under- 
stand which  has  yet  been  published  or  distributed. 

Commissioner  Noyes.  It  is 'fair  to  say  that  the  Elevated 
has  made  through  the  mechanism  of  the  Commission  every 
effort  to  reach  every  one  who  might  be  interested  in  the 
subject,  just  as  at  the  date  of  the  hearing  very  wide-spread 
publicity  was  given  to  the  statement  of  Mr.  Snow,  to  the 
Commission,  and  very  wide  publicity  was  given  to  the' fact 
tliat  one  of  the  contemplated  changes  was  the  ownership  of 
the  subway  in  ('ambridge,  so  that  every  business  man,  every 
man  in  the  community,  every  man  in  the  Board  of  Trade, 
doubtless  knew  that  such  a suggestion  had  been  broached. 

Mr.  Peyey.  They  had  an  o])portunity  to  know.  I grant 
you  that. 

Commissioner  Noyp:s.  Every  man  who  read  the  pajiers, 
e^'ery  Cambridge  man  — 

Mr.  Peyey.  Yes,  I saw  it  myself. 

(Commissioner  Noyes.  I think  very  wide  publicity  was 
given.  I think  the  (Commission  is  more  than  anxious  to  get 
the  o])inion  of  the  city  of  (Cambridge. 

Mr.  Pevey.  Are  there  other  questions? 

The  LiEi'TEXANT-(h)VEKN()K.  I think,  Mr.  Pevey,  that 
unless  the  Board  disagree  with  me,  that  we  better  set  it  down 
for  dCuesday,  ])receding  Thanksgiving,  the  2Sth.  Your  Board 
of  Trade  meets  on  the  22d,  and  Eriday  the  24th  you  think 
would  be  too  early? 

Mr.  Pevey.  'Ws,  sir.  I think  that  would  be  a little  early. 


1917.] 


HOUSE  — No.  1875. 


67 


I think  those  few  days  would  make  a great  deal  of  difference 
to  us,  but  not  a great  deal  of  difference  to  this  Commission. 
We  are  acting  in  conjunction  and  in  conference  also  with  the 
Mayor  in  this  matter,  and  I presume  that  within  that  time 
these  conferences  will  reach  a head  in  some  way. 

The  Lieutenant-Governor.  Then,  on  Tuesday  the  28th. 

Mr.  Pevey.  Yes.  Will  that  be  agreeable,  Mr.  Mayor? 

Mayor  Rockwood.  Yes,  that  will  be  all  right. 

Mr.  Pevey.  Thank  you,  gentlemen. 

The  Lieutenant-Governor.  And  we  wish  you  would  tell 
your  Board  of  Trade  and  your  committee  that  we  want  them 
to  be  ready  at  that  time  to  give  us  their  opinion. 

Mr.  Pevey.  Certainly. 

The  Lieutenant-Governor.  Does  anybody  else  desire  to 
be  heard? 

Mr.  Tuck.  Mr.  Chairman  — 

Commissioner  Noyes.  Just  a moment.  Is  the  Metropoli- 
tan Improvement  Association  of  Boston  represented  here? 
[No  response.]  Is  the  Boston  Chamber  of  Commerce  repre- 
sented? 

Mr.  George  H.  McCaffrey,  Assistant-Secretary,  Boston 
Chamber  of  Commerce.  It  is  not  officially  represented.  I 
am  simply  sent  here,  as  Secretary  of  the  Committee  on 
Public  Utilities,  to  hear  what  is  going  on. 

Mr.  Whitfield  L.  Tuck. 

Mr.  Chairman,  I appear  here  for  an  organization  repre- 
senting four  cities  and  seven  towns.  By  unanimous  vote  of 
that  organization,  I am  directed  to  appear  before  your  august 
body,  because  I think  while  I have  been  before  so  many  com- 
mittees and  commissions  as  I have,  it  has  not  been  my  privi- 
lege to  appear  before  so  many  important  personages  gathered 
together  in  one  group,  embracing  high  officials  of  the  State, 
representatives  of  both  branches  of  the  Legislature,  ajul  of 
the  very  able  and  eminent  commissions  of  this  State. 

The  body  I a])pear  here  for  is  the  Pomona  Grange,  Patrons 
of  Husbandry,  No.  28,  Middlesex-Essex,  which  represents  the 
cities  of  Woburn,  Medford,  Melrose  and  Everett;  and  the 
towns  of  Winchester,  Stoneham,  Reading,  North  Reading, 
Wakefield,  Wilmington,  and  Lynnfield. 


68 


BOSTON  ELEA^ATEI)  RAILWAY. 


[.Mar. 

To  me  it  is  a very  happy  morning,  to  appear  here,  before 
you  gentlemen,  especially  after  the  splendid  news  from 
California.  Why  I refer  to  that  is,  that  it  comes  through  my 
mind  that  this  hearing  is  very  similar  to  the  great  hearing 
that  the  prominent  men  have  had  lately,  at  the  hands  of  the 
people,  and  the  people  have  decided  in  behalf  of  the  i)eople, 
I think. 

This  hearing  is,  as  I say,  a hearing  for  corporate  organiza- 
tions against  the  great  majority  of  the  common,  plain  people. 
It  must  be  so  when  it  deals  with  the  6-cent  fare. 

It  was  a coincidence  that  only  yesterday  I called  on  one 
whom  I think  is  one  of  the  ablest  men  in  Massachusetts, 
and  he  brought  up  this  question  and  I — the  gentleman  was 
Honorable  George  Fred  Williams  — 

Commissioner  Noyes.  Who  was  that  you  mentioned? 

Mr.  Tixk.  The  Honorable  George  Fred  Williams.  I 
called  on  him  in  connection  not  with  this  matter,  but  to  pay 
my  compliments  to  him.  He  spoke  of  this  himself,  and  he 
said  it  reminded  him,  this  matter,  of  the  discussion  when  the 
charter  was  granted,  making  the  provision  that  the  fares 
shoidd  always  remain  at  not  exceeding  5 cents. 

The  position  that  the  people  took  on  the  matter  at  a 
previous  hearing  on  another  railroad,  in  regard  to  an  in- 
crease of  fare,  has  been  shown  since  going  ' through  this 
recent  State  campaign,  because  it  became  a State  issue,  the 
increased  fares  in  this  State  — by  one  of  the  i)rominent 
candidates  for  the  office  of  Governor,  and  he  was  referred 
to  and  answered  by  his  Excellency  the  (lovernor.  So  that 
the  people  are  knowing  about  this  thing,  and  thinking  about 
it,  and  I want  to  ask  you  now  before  1 forget  it,  that  if  in 
your  judgment,  after  hearing  from  the  city  of  Boston  and 
from  that  splendid  city  of  Cambridge,  if  you  have  to  re])ort 
to  our  (General  Court,  that  in  these  times  when  the  National 
Government  has  just  ])assed  a bill  for  public  ownershi])  of 
armor  ])late  j)lants  and  has  contributed  81 1 ,000, ()()()  to  it, 
that  you  do  rej)ort  a referendum  to  tiie  ])eople  of  this  State 
in  regard  to  the  (piestion  of  ])ublie  ownership  of  the  Boston 
Elevated  Railway. 

1 think  it  will  be  one  of  the  grandest  re])orts  ainl  best 


1917.] 


HOUSE  — No.  1875. 


69 


reports  in  this  great  Commonwealth,  of  anything  that  you 
gentlemen  may  draft,  in  the  report  that  you  may  make. 

Of  course  to  the  layman,  this  organization  of  joint  com- 
missions seems  a very  strange  thing,  because  we  had  sup- 
posed that  we  had  a body  to  deal  with  it,  the  Public  Service 
Commission,  that  they  would  deal  ably  with  this  matter. 
But  this  seems  to  be  so  arranged  that  we  have  not  only  that 
Commission  but  another  equally  eminent  commission  here, 
and  high  officers  of  the  State  government,  — an  Ex-Lieuten- 
ant-Governor, a Speaker  of  the  House,  President  of  the 
Senate,  — and  members  of  both  House  and  Senate,  — all 
friends  of  mine,  sitting  on  this  matter  instead  of  the  accredited 
body  such  as  hear  these  matters  in  the  State  of  New  York. 
That,  of  course,  was  by  an  act  of  the  Legislature  which  we 
shall  submit  to. 

I want  to  add,  too,  that  you  recommend,  because  my  ear 
has  been  very  close  to  the  people  in  the  last  few  weeks,  and 
I know  that  they  want  it,  just  the  same  as  this  other  matter, 
— public  ownership,  that  you  ask  and  recommend  that  the 
Public  Service  Commission  and  Transit  Commission  of  this 
Commonwealth  be  changed,  so  as  to  be  elected  by  the  peo- 
ple. That  is  a thing  that  is  to-day  very  close  to  the  hearts 
of  the  people  of  this  Commonwealth,  to  my  personal  knowl- 
edge. 

The  Lieutenant-Governor.  If  we  do  that,  would  you  be 
willing  to  be  a candidate? 

Mr.  Tuck.  I don’t  know  about  that,  1 am  sure.  I am 
glad  the  honorable  chairman  speaks  of  candidates,  because  it 
is  not  wholly  without  interest  to  me,  since  the  sixth  Middle- 
sex district  has  given  me  a tremendous  vote,  based  solely  on 
the  ground  that  I have  been  protesting  against  the  6-cent 
fare. 

So  I might  possibly  be  a candidate. 

I think  perhaps  there  are  some  members  who  might  be 
seeking  Governor’s  appointments  who  would  hardly  want  to 
be  candidates  before  the  public.  However  that  may  be,  1 
have  been  very  closely  in  touch  with  the  people  of  my  dis- 
trict for  the  last  six  weeks,  and  I can  offer  you  the  public 
opinion. 


70 


BOSTON  elevatp:d  railway. 


[War. 


Now,  right  in  connection  with  that,  I have  no  objection  to 
these  hearings  at  this  time,  but  it  did  seem  pretty  strange 
to  me  that  this  or  any  other  public  spirited  body  of  men, 
most  of  whom  are  active  as  I am,  in  this  campaign,  should 
call  a meeting  as  you  did,  two  weeks  ago,  when  the  pri- 
maries and  other  election  matters  in  Massachusetts  were  so 
active,  during  the  great  presidential  election  in  this  State. 
I was  dumbfounded  by  it.  I should  like  to  have  been  here, 
and  I was  very  much  surprised  when  I learned  of  it,  as  I 
had  been  deprived  of  the  opportunity.  And  I make  that 
suggestion  because  some  of  you  gentlemen  were  just  as 
active  in  the  campaign  as  I was,  and  some  of  you  were 
candidates. 

But  I do  not  know,  now  that  we  have  found  that  we  can 
elect  a president  without  the  great  States  of  IMassachusetts, 
New  York  and  Indiana,  but  that  I may  some  time  be  a 
candidate  myself.  But  let  that  be  as  it  may.  I know  you, 
many  of  you,  but  others  of  your  Commission  I have  never 
spoken  with.  I perhaps  know  personally  all  members  of  this 
Commission,  except  two  or  three,  and  so  anything  I say  will 
be  taken  as  it  may  be  by  your  Board.  Bat  the  Boston 
“Herald”  reported  a meeting  on  the  7th  of  November,  of 
the  stockholders  of  the  Boston  Elevated  Railroad.  I was 
told  — I do  not  represent  here  any  newspaper,  — but  I was 
told  that  the  Christian  Science  “Monitor”  gave  a more  full 
account  of  the  meeting.  One  gentleman,  a stockholder,  Mr. 
Bogigian,  was  protesting  against  paying  an  ex-president  of 
the  Boston  Elevated  Railroad  a salary  of  $25,000  for  being 
chairman  of  some  organization.  That,  in  passing,  shows  that 
since  this  petition  was  filed  with  you,  they  have  changed  the 
])rocedure  of  the  road;  1 don’t  know  why,  of  course.  I am 
not  in  their  confidences. 

This  Mr.  Bogigian  claims  that  if  he  could  have  been  here 
— he  started  to-day  for  California  — but  I hoj)e  every  mem- 
ber of  this  (’ommission  will  read  the  rej)ort  of  that  meeting 
in  the  C hristian  Science  ‘‘^Monitor”  or  in  the  Boston  “Her- 
ald” if  you  cannot  get  the  “Monitor,”  because  he  says  that 
the  facts  which  he  stated  are  more  fully  ])rinted  in  the 
" Monitor.” 


1917.] 


HOUSE  — No.  1875. 


71 


A few  years  ago,  the  labor  men  in  the  Boston  Elevated 
requested  an  increase  in  fares.  I attended  the  hearings  in 
Ford  Hall,  where  they  were  represented  by  James  H.  Vahey, 
as  their  counsel,  for  the  men,  and  I heard  the  then  president 
of  the  Boston  Elevated,  this  $25,000  man  who  was  recently 
discussed,  state  under  oath  that  he  could  not  state  what  he 
paid  one  Jacob  Wardwell  $25,000  a year  for.  Ordinarily  it 
is  not  our  business  what  they  do,  but  it  is  our  business  when 
they  come  to  the  Legislature  and  ask  that  we  as  individuals 
shall  be  compelled  to  pay  an  additional  cent  for  riding  on 
the  road. 

Now,  the  republicans  as  much  as  the  democrats,  the  people 
from  the  north  as  well  as  from  the  southern  part  of  the  State, 
the  people  from  Cape  Cod  clear  to  the  Berkshires,  are  think- 
ing of  these  things  as  they  never  did  before,  because  half  of 
the  things  which  I have  heard  have  been  brought  to  me  by 
the  republicans,  I should  say. 

The  Lieutenant-Governor.  They  have  had  to  pay 
b-cent  fares  up  in  Northampton  for  some  time  past. 

Mr.  Tuck.  And  you  probably  have  got  accustomed  to  it, 
but  I don’t  believe  they  like  it  any  better  than  the  Win- 
chester and  the  Woburn  people  do. 

The  Lieutenant-Governor.  They  don’t  like  it. 

Mr.  Tuck.  And  particularly  when  they  know  that  they 
should  not  have  done  it,  because  the  greatest  railroad  expert 
in  the  world,  Mr.  Peter  Witt,  of  Cleveland,  Ohio,  appeared 
before  the  Public  Service  Commission,  and  that  State  [Ohio] 
has  gone  the  same  way,  and  these  men  were  leaders  in  this 
work  when  we  were  all  opposing  it,  — and  Mr.  Witt  said  in 
cross-examination  before  this  Public  Service  Commission, 
and  that  Board  is  here  present  to-<lay,  now,  that  if  the  l^ay 
State  would  manage  their  business  economically  ami  care- 
fully, as  any  ordinary  individual  Would  manage  his,  and  put 
a lot  of  their  .stuff  into  the  junk  heap,  they  would  not  need 
to  increase  their  fares  to  0 cents,  but  would  bring  it  down 
to  5 and  even  still  further  down.  And  1 take  his  wonl  for 
it,  because  I have  more  faith  in  him  in  these  matters  than 
anybody  else  I ever  heard  of,  and  I have  followed  him  very 
closely  for  some  years. 


72 


BOSTON  ELE^\\TE1)  RAILWAY. 


[Mar. 


Now,  at  this  meeting  to-day,  the  public  is  not  here.  The 
representatives  of  the  public-service  corporations  are  here, 
and  they  are  always  here.  They  are  paid  for  it.  But  the 
time  has  come  in  tliis  State  when  the  people  want  to  know 
the  reason  why  they  are  being  ground  down  in  these  matters. 
I presume  it  will  not  have  much  weight,  but  I do  not  come 
with  the  title  of  mayor,  but  I come  as  a commoner,  and  a 
granger,  but  I think  I know  the  sentiment  of  this  State  as 
well  as  the  mayor  of  Boston  who  has  spoken  or  the  large  lot 
of  representatives  of  the  city  of  Cambridge. 

I was  surprised  to  hear  that  my  friend  Ex-i\Iayor  Ward- 
well  of  Cambridge  say  what  he  did,  because  the  people  of 
Winchester  want  those  subways,  and  they  hope  to  get  them. 
They  are  not  intended  solely  for  Boston.  The  great  dry- 
goods  stores  in  Boston  could  not  live  long  if  the  people  in 
Metropolitan  Boston  did  not  come  into  Boston.  x\nd  there 
should  be  no  charge  for  the  use  of  them.  These  people  have 
no  natural  right  to  them.  The  Boston  Elevated  and  the 
Bay  State,  — God  x^lmighty  gave  them  no  natural  rights. 
What  rights  they  have  got  they  obtained.  We  may  have 
different  opinions  on  how  they  obtained  them,  but  they  have 
got  them.  And  now  they  will  charge  the  girls  who  come  to 
Boston  to  work,  and  the  poor  boys  who  went  down  in  the 
Boston  Bridge  fatality,  one  of  the  worst  things  that  ever 
happened  in  the  city  of  Boston,  — and  that  motorman  said 
if  he  had  not  liad  an  obsolete  brake  on  that  car  that  he 
might  have  been  able  to  bring  it  to  a halt  before  it  went 
over,  and  only  a few  days  before  the  stockliolders  had  de- 
bated whether  they  would  pay  S25,()()()  for  a man  to  do  noth- 
ing, and  still  not  have  the  cars  equipped  with  pro])er  brakes 
to  bring  my  wife  and  child  and  your  wife  and  child  safely 
home  to  us. 

* I think  I have  covered  this  situation  -briefly,  but  I do  ask 
again  tliat  you  will  in  your  re])ort  to  the  Legislature  recom- 
mend a referendum  to  tlie  })eo])le,  and  with  that  recom- 
mendation, of  course  it  is  a strange  thing  to  ask  of  this  Board 
which  is  constituted  in  ])art  of  these  same  two  bixlies,  but  1 
ask  that  the  Public  Service  (’ommission  and  the  Boston 
Transit  ('ommission  shall  be  elected  by  the  people.  But  1 


1917.] 


HOUSE  — Xo.  1875. 


do  it  with  no  feeling  whatever,  but  that  in  this  State  the  peo- 
ple may  get  the  right  they  do  in  other  States,  where  the 
Commissioners  are  elected.  If  you  gentlemen  had  to  sit  up 
nights  and  go  around  and  see  the  voters  as  I have  no  doubt 
your  honorable  chairman  has  to  do,  I presume  you  would 
sometimes  get  some  view  of  the  public  sentiment  about  6- 
cent  fares.  I have  said  all  that  I wish  to  say  on  that,  but 
I wish  to  be  publicly  recorded  as  representing  the  grangers  in 
this  district.  And  there  are  very  large  numbers  in  this  State 
and  in  this  nation,  and  it  was  their  unanimous  vote  that  I 
was  directed  to  come  here  and  record  their  protest  against 
an  increase  in  fares  on  the  Boston  Elevated.  My  judgment 
is  that  there  will  be  public  ownership,  and  that  is  to  be  the 
subject  of  discussion  at  a meeting  of  the  Boston  City  Club 
within  the  next  few  days,  at  which  no  doubt  you  gentlemen 
who  are  members  will  be  present.  Now,  gentlemen,  be  for- 
ward, and  get  into  the  proposition.  Instead  of  squeezing 
more  out  of  the  public  of  Massachusetts,  do  something  for 
the  people  of  the  State,  and  instead  of  further  oppressing 
them  by  undue  burdens,  imposed  upon  them  in  behalf  of  the 
owners  and  operators  of  these  corporations  with,  their  watered 
stock,  do  something  for  the  people  of  Massachusetts. 

Mr.  Brush.  It  is  not  proper  for  me  to  discuss  this  case 
at  this  stage  and  I am  not  called  upon  to  do  so  now,  but  it  is 
absolutely  unfair  to  the  men  of  the  road,  and  to  this  body 
and  others  concerned,  to  have  this  man  make  the  staternent 
which  he  has  in  this  public  body,  about  the  recent  catas- 
trophe about  which  no  one  feels  worse  than  the  management 
of  the  road,  to  the  effect  that  the  equipment  was  defective. 
There  is  absolute  evidence  to  the  contrary,  as  to  the  equip- 
ment, and  it  is  not  fair  to  let  that  statement  made  here  in 
this  public  presence  go  unchallenged. 

Commissioner  Russell.  Mr.  Tuck,  have  you  any  au- 
thority for  your  statement,  that  that  was  due  to  defective 
equipment,  or  a defective  brake? 

Mr.  Tuck.  I said  in  stating  that,  that  the  man  said  that 
if  he  had  had  an  up-to-date  brake  he  would  have  been  able 
to  stop  the  car  before  it  went  over  into  the  water.  That 
was  in  the  public  print,  and  is  stated  in  the  pai)er,  and  if 


74 


BOSTON  ELEA^ATED  RAILWAY. 


■[Alar. 


you  have  any  doubt  about  it,  about  the  equipment,  you 
ought  to  ask  men  living  on  the  railway,  who  come  in  occa- 
sionally, — if  you  lived  where  another  member  of  your  Board 
lives,  in  Winchester,  — but  that  is  another  railway,  beyond 
the  Boston  Elevated,  but  still  it  is  controlled  by  the  same 
people,  the  same  brokers  and  financiers.  If  you  have  any 
doubt  about  these  things  in  a general  way,  travel  around  on 
the  Bay  State  and  on  the  Boston  Elevated  a little  more, 
instead  of  automobiles,  and  you  will  be  convinced  that  what 
I say  is  true. 

Commissioner  Noyes.  That  is  a very  unfair  statement,  I 
think.  Air.  Chairman.  I think  it  is  very'  unfortunate  that 
this  Commission  has  been  used  to  give  it  publicity.  I hope 
as  little  publicity  will  be  given  to  this  man’s  statement  as 
can  be. 

Mr.  Charles  A.  U(ford  of  Dorchester. 

Air.  Chairman,  I come  to  ask  of  this  Board  that  the  chair- 
man will  delegate  one  or  more  of  your  members  to  look  over 
my  notes  and  studies  and  figures,  and  to  criticize  them  before 
I take  the  time  of  this  assembly  of  gentlemen,  every  one  of 
whom  I admire  for  their  skill  and  for  their  patience  with  me 
in  the  many  years  that  I have  been  advocating  that  Alatta- 
pan  circuit,  and  other  improvements  for  our  district. 

I have  this  map  and  I stand  for  the  abolition  of  the  pay- 
as-you-leave  system.  And  in  hunting  over  the  finances  of  the 
Bo^on  Elevated  I am  greatly  encouraged  over  certain  phases 
of  the  situation.  But  at  this  time  I don’t  ask  you  to  give  me 
your  time.  I ask  for  it  a little  later,  because  when  I pre- 
sented to  one  member  of  this  Board  or  two  members,  my 
material,  they  said  it  was  hardly  etiquette  for  them  to  listen 
to  me  until  authorized  by  the  chairman.  As  I have  two 
bills  with  the  Legislature  — 

d'he  LiEUTENANT-GovEiiNOK.  When  could  you  sit  down 
with  some  of  us  and  go  into  that? 

Air.  rFFOKi).  At  any  time.  Air.  Chairman,  that  you  would 
give  me  the  oi)i)ortunity. 

''idle  Lieftenant-Goveuxor.  Well,  it  would  be  conven- 
ient for  you,  would  it,  to  see  us  at  your  i)lace  of  business,  or 
would  you  rather  come  u])  to  the  State  House? 


1917.] 


HOUSE  — No.  1875. 


75 

Mr.  Ufford.  I would  rather  come  up  to  the  State  House 
in  a public  place,  and  have  any  op^ponents  who  want  to  listen 
to  what  I say,  because  I think  I can  find  a large  sum  of 
money  and  possibly  avoid  the  necessity  of  6-cent  fare. 

Commissioner  Noyes.  Well,  that  is  interesting,  Mr. 
Chairman. 

Mr.  Ufford.  If  you  would  be  willing  to  look  at  just 
some  of  the  items  in  a general  way.  I have  run  it  out  with 
foot  notes  explaining  the  different  amount's  of  money  that 
I anticipate  saving,  and  it  runs  up  into  a large  sum  of  money. 
There  is  one  bill  that  I do  ask  the  Board’s  entire  study  upon, 
in  regard  to  the  co-relation  of  steam  and  electric  railroads. 
Without  co-relation  it  will  be  impossible  for  me  to  carry  out 
that  whole  plan.  One  of  our  senators  has  promised  to  bring 
up  my  bills  which  are  now  referred  to  the  next  General 
Court,  with  reference  to  the  Mattapan  loop.  In  order  to  get 
this  great  saving  and  to  do  for  my  district  what  would  be 
just  to  it,  and  to  maintain  a 5-cent  fare  to  Dorchester  and 
away  out  to  Sullivan  Square,  I would  like  to  have  three 
gentlemen,  if  you  would,  look  over  my  memorandum  and  I 
would  like  to  have  two  or  three  representatives  of  the  Boston 
Elevated  present  at  the  same  time,  because  I do  not  repre- 
sent the  Boston  Elevated.  I stand  for  the  community  after 
ten  years’  struggle  for  that  Mattapan  circuit.  I had  that 
circuit  almost  through,  but  one  member  of  the  Legislature 
put  a lemon  into  it  and  so  I have  to  go  all  over  the  work 
again.  But  I am  opposed  to  public  ownership  because  of 
this  one  fact.  The  Smith  law  of  Ohio  killed  public  owner- 
ship. That  law  is  this,  that  public  utilities  shall  meet  their 
upkeep  from  their  income.  The  minute  you  have  public 
ownership,  up  goes  their  rate.  This  I propose  as  a substitute. 
I think  from  a number  of  years’  study,  evenings  and  morn- 
ings and  all  of  my  spare  time,  that  1 have  got  something 
valuable  for  the  Commonwealth. 

The  Lieutenant-Governor.  We  will  have  a committee, 
if  we  can,  to  take  the  matter  up  with  you  and  shall  be  very 
glad  to. 

Mr.  Ufford.  Thank  you,  and  1 hoj)e  these  gentlemen  ap- 
preciate my  not  taking  the  time  this  morning. 


76 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


The  Lieutenant-Governor.  Does  anybody  else  desire 
to  be  heard?  [No  response.]  Do  you  know  whether  the 
Chamber  of  Commerce  will  want  to  be  heard  or  not? 

Mr.  McCaffri;y.  No,  sir;  I cannot  say  as  to  that. 

The  Lieutenant-Governor.  Have  they  the  matter  under 
consideration? 

■Mr.  McCaffrey.  They  have  it  under  consideration. 

The  Lieutenant-Governor.  Does  anybody  else  want  to 
be  heard?  [No  response.]  If  not,  we  will  go  into  executive 
session. 

Public  hearing  adjourned,  to  be  resumed  on  Tuesday, 
I November  28,  1916. 


1917  I 


HOUSE  — No.  1875. 


77 


FIFTH  DAY. 

Hearing  held  at  room  362,  State  House,  Boston,  Mass.,  at 
10  A.M.  on  November  20,  1916. 

Present.  — xAll  the  members  of  the  Commission,  viz.,  the 
Lieutenant-Governor,  President  Wells,  Speaker  Cox,  Senators 
Bates  and  Eldridge,  Representatives  Jewett,  Newhall,  Dono- 
van and  Lawler,  Commissioners  Macleod,  Meaney,  Stone, 
Eastman  and  Russell  [of  the  Public  Service  Commission] 
and  Commissioners  Swain,  Allen,  Ellis,  Quincy  and  Noyes 
[of  the  Boston  Transit  Commission]. 

Appearances.  — For  the  Boston  Elevated  Railway  Com- 
pany: Matthew  C.  Brush,  Esq.,  President,  Frederic  E. 
Snow,  Esq.  [Gaston,  Snow  & Saltonstall],  Counsel.  John  E. 
Macy,  Esq.,  President,  Lmited  Improvement  Association. 
Jean  P.  Nickerson,  Esq.,  representing  the  Germantown  Citi- 
zens’ Improvement  Association.  Senator  John  E.  Beck  of 
Chelsea.  Ex-Mayor  John  F.  Fitzgerald  of  Dorchester. 

President  Wells.  [Presiding  at  such  times  as  the  Lieu- 
tenant-Governor is  absent  from  the  room.]  The  hearing  will 
come  to  order.  The  Lieutenant-Governor  is  obliged  to  be  at 
a Council  meeting,  and  that  is  the  reason  for  my  taking  the 
place  of  the  presiding  officer.  If  there  is  no  objection  made, 
I will  continue  in  this  position. 

This  hearing  is  in  the  nature  of  a public  hearing  and  has 
been  quite  extensively  advertised  as  such.  I understand  that 
there  has  been  no  special  requests  and  no  special  assigjiments 
for  this  meeting,  but  the  Commission  is  ready  to  hear  any 
person  who  desires  to  be  heard. 

I think  perhaps  in  the  first  instajice  we  ought  to  hear  from 
those  people  who  have  not  been  heard  at  all,  and  then  if 
there  is  time  we  will  hear  from  those  who  have  been  heard  if 
they  desire  to  be  heard  a second  time.  Is  there  any  person 
present  who  has  not  been  hearcl  at  all,  who  desires  to  be 
heard  at  this  time? 


78 


BOSTON  ELE^\\TED  RAILWAY. 


[]Mar. 


Mr.  Charles  A.  LYford.  Mr.  Chairman  — 

President  Wells.  I understood  you  appeared  at  the  last 
hearing.  I don’t  know  whether  the  Lieutenant-Governor  has 
taken  up  your  suggestion  or  not. 

^Ir.  L'fford.  I rise  to  give  the  Chair  some  information, 
namely,  that  our  Lieutenant-Governor  who  left  a few  minutes 
ago  said  that  after  all  these  gentlemen  were  heard  this  morn- 
ing, if  there  was  time  I might  submit  just  an  abstract  of  my 
proposition  which  I desire  three  gentlemen  to  consider.  The 
reason  I come  this  morning  is  that  I have  been  away  to  New 
York  and  I fear  that  at  the  next  meeting  I may  be  in 
Toronto  indefinitely  detained  on  account  of  business  appoint- 
ments. Our  secretary  has  been  wounded  in  the  trenches,  our 
president  is  dead  and  I must  go  up  there  to  attend  to  some 
business*  with  which  I am  connected  I fear.  So  that  any- 
thing I have  to  offer  to  the  committee  should  be  offered  this 
morning.  I give  way  to  all  these  gentlemen,  and  if  you  want 
to  consider  this  proposition  I shall  be  very  glad  to  stay  here 
now  and  give  you  my  maps,  plans  and  studies,  so  that  you 
may  consider  them  and  help  me  on  some  of  the  items  which 
I need,  through  the  experts  connected  with  the  Commissions. 

President  Wells.  Is  there  any  one  who  appears  here  who 
desires  to  be  heard  by  the  Commission  relative  to  the  case 
submitted  by  the  Boston  Elevated  Street  Railway? 

Daniel  C.  Murphy,  Esq. 

My  name  is  Daniel  C.  Murphy,  representative  from  Ward 
17.  I would  like  to  know  what  this  bill  really  consists  of. 
I am  a representative  from  Ward  17. 

President  Wells.  What  is  your  name,  ])lease? 

Mr.  Murphy.  Danield  C.  Murphy. 

President  Wells.  What  is  the  question,  please? 

Mr.  Murphy.  I would  like  to  know  just  what  the  bill  is. 

President  Wells.  There  is  no  specific  bill. 

Mr.  Mi*rphy.  1 understood  it  was  to  abolish  transfers. 
I mean,  to  cage  them  all  iji,  the  same  as  they  do  at  Dudley 
Street. 

President  WfiLLs.  There  is  no  bill  ])ending  before  the 
C'ommission  to  abolish  transfers  or  to  cage  them  all  in,  as 
you  s])eak  of  it. 


1917.] 


HOUSE  — No.  1875. 


79 


Mr.  Murphy.  That  is  the  way  I understood  it. 

President  Wells.  The  proposition  set  forth  by  the 
Boston  Elevated  is  of  course  in  print.  These  suggestions  are 
open  for  discussion,  either  for  or  against  any  one  of  them, 
as  the  Mayor  of  the  city  of  Boston  quite  generally  elaborated 
upon  them  at  the  last  meeting. 

Mr.  Murphy.  Is  it  possible  for  me  to  get  one  of  those? 

President  Wells.  Yes,  indeed;  I think  the  clerk  will  be 
glad  to  furnish  you  with  one.  Is  there  anybody  else  who 
desires  to  be  heard  at  this  time? 


Jean  P.  Nickerson,  Esq. 

I represent  the  Germantown  Citizens’  Association  of 
Boston. 

I am  fearful  that  a good  many  people  who  might  come 
here  don’t  quite  understand  what  this  hearing  is.  We  took 
the  matter  up  at  the  association  meeting  yesterday,  and  I 
was  delegated,  or  the  job  was  wished  on  me,  of  coming 
down  here  and  representing  the  Germantown  Citizens’ 
Association. 

Now  I understand,  and  if  I am  not  correct  I wish  the 
chairman  would  correct  me,  because  I do  want  to  get  an 
understanding  of  the  thing  before  I undertake'  to  try  to  help 
the  committee,  — I understand  that  this  is  a hearing  upon 
the  finances  of  the  Elevated  Railway;  that  the  Elevated 
Railway  company  tried  to  show  at  least  — whether  they 
have  shown  conclusively  or  not  is  another  thing  — that 
they  have  got  to  have  some  relief  of  some  kind,  form  or 
shape.  Is  that  a fair  statement  of  it?  • 

President  Wells.  It  is  a general  statement,  yes. 

Mr.  Nickerson.  Then  the  Germantown  Citizens’  Asso- 
ciation wants  to  say,  first,  that  we  are  opposed  to  any  zone 
system,  and,  second,  we  are  opposed,  as  all  suburbanites 
would  be,  to  an  increased  fare. 

Of  course  there  are  a number  of  people  out  there  who  have 
built  their  homes  upon  the  belief  that  they  can  get  cheap 
transportation.  We  have  been,  in  the  West  Roxbury  dis- 
trict, for  some  years,  trying  to  get  cheaper  transportation, 


so 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


and  of  course  we  would  protest  with  a large  round  voice  any 
increase  in  fares. 

I have  tried  to  grasp  the  thing  as  near  as  I can,  and  I 
don’t  say  that  I can  offer  any  suggestions  in  the  way  of  ex- 
pert opinion,  because  I don’t  believe  I am  competent  to  do 
it;  but  the  thought  comes  to  my  mind  that  the  question  of 
subway  rentals  might  give  some  relief,  and  that  would  be  a 
burden  upon  the  taxpayers  of  which  I am  one. 

I think  that  the  whole  city  of  Boston  is  benefited  by  the 
ser\'ice  they  receive  from  the  Elevated  Railway,  and  it 
does  not  occur  to  me  that  the  suburban  taxpayer  would 
kick  half  as  much  or  would  kick  at  all,  if  some  arrangement 
could  be  made  in  regard  to  the  subway  rentals,  so  that  the 
taxpayer  or  j^roperty  owner  — or  that  this  increase  in 
revenue  might  be  a burden  upon  their  shoulders  because 
it  would  amount  to  very  few  cents  in  the  case  of  each  home 
builder.  But  if  the  fares  were  increased,  it  would  be  a big 
burden  because  our  small  property  owners  out  there  who 
have  built  their  little  homes,  — it  would  depreciate  the 
value  of  the  property.  Som.e  of  us  have  a little  more  than  a 
little  home,  and  have  built  upon  the  feeling  that  we  could 
make  a little  something  outside  of  our  own  home,  but  of 
course  if  our  property  is  decreased  in  value,  it  will  mean  a 
considerable  loss;  whereas  the  other  is  the  easier  method. 

I suggest  that,  not  as  an  expert,  but  simply  as  one  wlio  has 
read  perhaps  upon  the  subject,  and  not  studied  it. 

President  ^Wells.  Do  you  think  that  the  decrease  in  the 
value  of  your  proj)erty  through  the  increase  in  fares  would  be 
more  than  the  increase  in  taxes  by  reduction  of  subway 
rentals? 

Mr.  XiCKEHsox.  Oh,  yes,  by  a thousand  ]jer  cent. 

President  AVp:lls.  Is  there  any  question  from  the  com- 
mittee? 

Senator  Bates.  I think  what  you  say  is  pretty  true, 
that  those  ])eoj)le  having  bought  their  ])ro])erty  ought  not  to 
have  their  fares  increased  to  the  city  ])ropcr.  But  do  you 
think  that  they  ought  to  have  the  right  to  ride  to  Arlington 
or  Medford  from  (iermantown,  for  the  same  fare  as  to 
Boston?  That  is,  a ride  clear  across  the  city.  I will  admit 


1917.] 


HOUSE  — No.  1875. 


81 


that  they  ought  to  ride  to  the  city  of  Boston  for  that  fare, 
but  ought  they  to  have  the  right  to  go  to  Arlington  or 
Medford? 

Mr.  Nickerson.  Well,  I have  views  of  my  own  on  that. 
I believe  the  electrification  of  steam  railroads  wouM  not 
only  benefit  the  railroads,  but  would  benefit  the  public.  It 
seems  to  me  that  the  freights  that  come  to  Boston  over  the 
steam  railroads  give  the  suburbanites,  the  people  in  the 
towns,  that  the  gentleman  has  asked  about,  the  right  to 
receive  a low  fare,  but  not  from  the  Elevated  Railway  be- 
cause that  don’t  bring  in  the  freights. 

It  does  seem  to  me  that  the  steam  railroads  ought  to 
take  care  of  it.  That  is  a subject  I am  entirely  familiar 
with  and  can  go  into  detail  about  that.  If  I lived  in  one  of 
those  towns  of  course  naturally  I should  say  that  I had  a 
right  to  be  transported* by  some  public  service  corporation, 
whether  it  was  the  Elevated  Railway  or  not,  I could  not  say. 
I should  think  that  the  solution  of  the  transportation  prob- 
lem of  Boston  lies  with  the  steam  railroads,  as  well  as  with 
the  Elevated,  and  I am  certain  that  the  experts  of  the  New 
York,  New  Haven  & Hartford  Railroad  has  testified  that  if 
the  railroad  be  equipped  with  electricity,  that  they  could 
transport  at  a cheaper  price  than  they  do,  and  still  rejuvenate 
the  railroad.  I don’t  know  that  that  is  the  direct  answer  to 
the  gentleman’s  question,  but  I do  know  something  about 
the  question  of  transportation  as  a whole  in  Boston.  I have 
given  a good  deal,  of  thought  to  it,  and  have  not  only 
studied  the  question  but  have  been  with  experts  whose 
opinions  are  valuable.  Does  that  satisfy  you? 

Senator  Bates.  I don’t  think  that  is  even  an  indirect 
answer.  The  question  is  whether  your  people  would  object 
to  an  increase  in  the  5-cent  fare  to  go  across  the  city,  into 
another  city  on  the  opposite  side. 

Mr.  Nickerson.  I don’t  think  we  have  any  right,  being 
way  out  in  Germantown,  to  favor  the  curtailment  to  them 
of  the  same  privilege  that  we  have. 

Senator  Bates.  That  is  not  it.  We  agree  that  every 
person  who  is  now  in  the  limits  of  the  5-cent  fare  should  be 
transported  into  the  city.  The  question  is  whether  they 


82 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


ought  to  be  allowed  to  go  out  again  as  far  as  Arling'ton,  or 
from  Arlington  "to  East  Boston,  from  West  Roxbury  to 
Medford,  and  other  such  trips.  I think  I have  heard  several 
people  express  the  willingness  to  be  charged  10  cents  when 
they  ‘come  into  the  city,  and  go  out  into  another  place. 
Now,  how  do  your  people  feel  about  that? 

Mr.  Nickerson.  Our  people  are  quite  a ways  out  of  the 
city, — to  Germantown.  ,We  believe  in  reciprocity,  and  I 
doubt  very  much  if  our  association  would  take  such  an 
attitude  as  indicated  by  the  question.  I think  we  are  pretty 
near  as  far  out  as  Arlington.  And  there  is  no  reason  in  the 
world  why,  if  we  are  5-cent  fares  — 

Commissioner  Ellis.  Mr.  Nickerson,  do  you  think  that 
a citizen  in  Germantown  ought  to  be  able  to  take  a car  out 
in  Germantown  and  come  down  to  Massachusetts  Avenue  on 
the  Elevated,  and  then  get  a transfer  and  go  out  to  Arling- 
ton for  5 cents? 

Air.  Nickerson.  I think  they  ought  to  be  entitled  to  go 
as  far  as  they  can  for  5 cents.  Is  that  right? 

(Commissioner  PIllis.  Well,  that  is  a sufficient  answer. 

President  Wells.  Are  there  any  other  questions  by  any 
other  member  of  the  committee? 

Mr.  Nickerson.  The  Senator  comes  from  our  district 
and  knows  the  situation  there  better  than  I do. 

John  K.  Macy,  Esq. 

Mr.  Chairman,  my  name  is  elohn  E.  Macy,  and  I represent 
the  Lnited  Improvement  Association  of  which  I happen  to  be 
the  president,  and  I ap])ear  after  having  gone  over  the 
matter  to  some  extent,  or  to  a considerable  extent  if  we 
reckon  the  amount  of  time  involved,  with  a committee 
appointed  by  the  United  Improvement  Association,  and  I 
am  here  to  say  in  the  first  place  that  if  the  (Commission 
ex])ects  to  get  a great  deal  of  assistance  in  the  matter  of  the 
details  of  figures  and  finances  involved  in  the  Elevated’s 
affairs  at  tlie  j)resent  time,  from  the  public,  of  course,  the 
public  cannot  assist  tliem  a great  deal. 

The  United  Im])r()vement  Association,  if  I may  say  so, 
is  a federal  or  central  organization  wliich  is  made  uj)  of 


1917.] 


HOUSE  — No.  1875. 


83 


delegates  from  all  of  the  local  improvement  and  citizens’ 
associations  throughout  the  city,  so  that  although  the  United 
Improvement  Association  itself  is  a comparatively  small 
body,  it  represents  in  a v/ay  some  23  local  organizations 
constituted  in  various  communities  about  the  city,  and  with 
a membership  perhaps  totalling  over  5,000  in  number. 

The  difficulty  that  we  find  is  probably  the  difficulty  which 
everybody  has  found  who  as  a mere  citizen  attempts  to-  go 
into  this  question.  It  involves  a study  of  details  and  finan- 
cial statistics  and  an  inquiry  into  facts  which  it  is  impossible 
for  us  to  make.  We  assume  that  the  Commission  is  making 
that  inquiry.  We  have  noticed  that  in  the  original  message 
of  the  Governor  to  the  Legislature,  it  is  suggested  that  the 
Commission  be  appointed  to  inquire  into  the  affairs  of  the 
Boston  Elevated  Railway,  with  a view  to  determining  if 
they  needed  more  revenue,  and  if  so,  how  it  should  be  given, 
but  I notice  that  the  resolution  as  passed  says  that  the 
Commission  shall  consider  the  affairs  of  the  Boston  Elevated 
Road. 

We  must  assume  that  this  Commission  is  making  its  own 
investigation  of  the  affairs  and  condition  of  the  road.  It 
may  be  that  having  the  members  of  the  Public  Service  Com- 
mission as  members  of  this  Commission,  the  report  and 
inquiry  and  investigation  of  the  Public  Service  Commission 
will  be  sufficient;  and  so,  in  appearing  here  and  making  any 
suggestion  regarding  an  increase  of  revenue  for  the  company, 
we  must  assume  and  we  are  entitled  to  assume  that  the 
Public  Service  Commission  is  rendering  its  report  upon  its 
own  investigation,  as  to  whether  the  facts  stated  by  the  com- 
pany in  its  statement  are  true,  and  how  far  it  is  equitable 
with  regard  to  the  past  management  of  the  company  for 
them  to  assume  at  this  time  that  the  public  should  bear  the 
entire  burden  of  any  past  losses;  for  it  comes  to  that  in  the 
last  analysis.  We  must  leave  that  to  the  Commission,  and 
make  any  suggestions  which  we  can  make  wholly  subject  to 
that  condition,  that  the  facts  which  we  have,  and  which  are 
important  in  this  investigation,  are  true. 

Apparently  there  are  two  classes  of  reliefs  that  are  sug- 
gested by  the  company.  One  of  these  classes  involves  the 


84 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


increase  of  rates,  and  the  other  class  involves  the  shifting  of 
some  of  that  additional  burden  from  the  rate  paj’ers  to  the 
shoulders  of  the  commmnity. 

The  first  fundamental  question  is  the  question  of  policy,  as 
to  whether  the  passengers  should  stand  an  increase  in  rates, 
or  whether  some  share  above  the  5-cent  limit  should  be  trans- 
ferred to  the  property  of  the  community.  As  to  the  increase 
of  fares,  the  association  which  I represent  opposes,  most 
strongly  and  emphatically  and  unqualifiedly  any  increase  in 
rates.  As  to  the  zone  system,  we  believe  the  zone  system  is 
a most  inequitable  suggestion.  It  involves  practically  going 
back  upon  the  contract  made  with  the  people  in  this  com- 
munity back  in  1897  for  a S^cent  rate  throughout  the  entire 
system  for  25  years.  The  communities  in  the  outer  suburbs 
have  grown  up  on  the  faith  of  that  contract  for  the  5-cent 
fare.  Men  have  built  houses  and  established  their  homes, 
suburban  property  has  been  developed  for  homes  and  for 
factories,  and  villages  and  towns  have  grown  up  on  the 
faith  of  the  contract  for  a 5-cent  fare.  And  to  depart  from 
that  and  charge  a larger  fare  is  certainly  a most  inequitable 
proceeding  and  would  be  more  inequitable  than  a general 
increase  in  fare. 

In  addition  to  that  is  the  consideration  that  the  zone 
system  of  fares  tends  to  congestion  in  the  populous  districts 
of  the  city.  That  congestion  is  not  helpful,  that  congestion 
is  not  healthful,  that  congestion  is  not  for  the  general  benefit 
of  the  community,  but  the  spreading  out  of  the  householders 
within  the  city,  into  the  outlying  communities,  should  be 
encouraged  rather  than  a further  congestion  in  the  central 
and  closely  populated  districts. 

As  to  the  abolition  of  free  transfers,  that  is  something' that 
we  have  been  unable  to  see  the  equity  of.  As  I understand 
it,  it  involves  the  proposition  that  a man  who  travels,  say 
to  Northampton  Street  on  tjie  Elevated  Road,  and  there 
transfers  to  a surface  car  to  go  out  perhaps  at  right  angles 
to  the  Elevated  structure,  would  be  charged  an  additional 
sum,  perhaps  another  fare,  for  a transfer,  or  at  least  a tax 
uj)on  the  transfer  of  some  kind,  if  not  another  fare.  The 
equity  of  that  is  not  aj)parent,  the  justice  of  it,  or  any 


1917.] 


HOUSE  — No.  1875. 


85 


reasonable  basis  upon  which  it  can  be  founded.  To  suggest 
that  I can  travel  to  Forest  Hills  and  then  transfer  to  Roslin- 
dale  and  West  Roxbury  for  5 cents,  and  then  to  suggest 
that  if  I go  to  Northampton  Street  and  transfer  to  a surface 
car  and  go  another  quarter  of  a mile  at  right  angles,  I shall 
be  charged  another  fare  simply  because  I have  turned  a 
corner,  although  I have  gone  a very  much  less  distance, 
does  not  seem  to  me  reasonable.  It  is  simply  a case  of  get- 
ting a man  to  pay  another  fare,  because  he  has  turned  a 
corner  in  the  street,  or  in  the  system,  although  he  has 
traveled  a less  distance;  and  I must  say  that  we  cannot 
support  that  or  advocate  it. 

Then,  the  question  of  a general  increase  in  fare  arises,  a 
general  increase  to  a 6-cent  rate,  and  that  brings  up  fairly 
the  question  of  whether  there  should  be  an  additional  burden 
imposed  upon  the  passengers  or  whether  that  additional 
burden  should  be  borne  by  the  general  property  of  the  com- 
munity in  the  form  of  some  increase  in  the  passengers.  And 
we  advocate  the  latter  course. 

We  believe  that  it  is  only  fair  that  the  remaining  burden 
in  excess  of  the  5-cent  limit  should  be  borne  out  of  the  gen- 
eral property  of  the  metropolitan  district  or  of  the  State. 

The  purpose,  the  benefits  and  advantages  of.  these  new 
improvements,  we  assume  to  have  caused  this  additional 
burden  upon  the  Elevated,  are  of  two  sorts:  One  is  rapid 
transit,  and  the  other  is  the  relief  of  congestion  in  the 
streets,  and  it  has  seemed  to  me  that  nearly  all  of  the  dis- 
cussion of  the  equities  of  the  situation  is  based  upon  the 
assumption  that  rapid  transit  is  the  only  object,  and  that 
therefore  it  is  chiefly  for  the  benefit  of  the  traveling  public, 
especially  in  the  outer  districts,  that  these  new  subways  have 
been  constructed;  whereas,  it  seems  to  me,  that  the  relief 
of  the  streets  of  the  city  was  one  of  the  chief  purposes  of  it, 
and  one  of  the  great  advantages. 

The  benefit  of  rapid  transit  is  certainly  shared  to  a great 
extent  by  the  property  of  the  suburban  districts  owned  by 
persons  who  will  never  ride  on  the  railroad  at  all.  Take  a 
man  who  owns  a block  of  stores  in  Malden  Square,  or  in 
Peabody  Square  in  Ashmont,  or  in  West  Roxbury;  he  may 


86 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


never  ride  on  the  cars,  but  the  entire  value  of  his  property 
has  grown  up  with  the  community.  That  is,  the  value  of  his 
property  has  grown  simply  because  the  community  in  which 
it  is  situated  has  grown,  and  that  community  has  grown  be- 
cause of  the  rapid  transit  facilities  that  have  been  afforded. 
And  so  it  seems  to  us  that  it  is  only  equitable  that  his  prop- 
erty should  stand  a slight  increase  in  practice  rather  than 
that  the  passengers  should  bear  the  increase  in  fares. 

Of  course  if  there  are  increased  fares  it  may  reach  him 
through  some  economic  force,  but  we  are  discussing,  I take 
it,  the  most  just  way  of  imposing  the  burden  in  the  first 
instance.  And  so  as  to  property  upon  the  connecting  roads 
with  the  Elevated,  all  of  which  are  benefited  far  beyond  the 
limits  of  what  we  call  the  metropolitan  district,  by  rapid 
transit  over  the  Elevated  Road. 

But  the  relief  of  the  streets  of  the  city  is  a benefit  that 
is  so  directly  granted  to  the  general  community  that  it  can 
well  be  shared,  can  well  be  borne  as  to  the  improvements  of 
the  streets  themselves  are  borne,  by  the  general  funds  of  the 
Metropolitan  district,  if  not  by  the  State. 

The  teaming  of  freight  across  the  city,  the  advantage  to 
the  farmer  who  comes  in  for  30  miles  to  market  his  goods 
and  drive  through  the  city,  and  the  benefit  to  automobilists 
of  running  through  the  city,  Washington  Street,  Tremont 
Street,  and  these  other  streets  which  have  been  relieved  by 
the  subways  from  their  tremendous 'congestion  of  10  or  15 
years  ago,  is  of  such  a benefit  that  it  should  be  considered  a 
part  of  the  street  expenses. 

Senator  Bates.  Would  not  your  argument  apply  to  cer- 
tain classes  of  real  estate  in  just  the  other  way?  Su])i)ose 
you  suggested  to  the  Boylstoii  Street  Merchants’  Association 
that  their  ])roperty  tax  ought  to  be  increased  by  reason  of 
the  im])rovement  iji  the  street  following  the  construction  of 
the  subway  under  Boylston  Street?  They  claim  just  the 
o})])osite  is  the  case.  When  you  raise  the  tax  valuation,  you 
raise  it  oji  everybody,  not  alone  in  Peabody  Square  or  ]\Ial- 
den  or  anywhere  else,  but  everywhere. 

Mr.  Macy.  I understand  you  cannot  distribute  the 
burdeji  so  that  there  will  be  any  a])])roaeh  to  exact  justice  in 


1917.] 


HOUSE  — No.  1875. 


87 


the  first  instance,  but  that  is  so  with  any  problem  in  taxa- 
tion, I presume. 

Commissioner  Eastman.  Mr.  Macy,  don’t  you  think  that 
the  elevated  structure  has  hurt  property  values  in  the  South 
End  and  in  Charlestown? 

Mr.  Macy.  There  is  no  doubt  that  it  has,  and  those 
people  have  been  well  paid  for  it.  And  now  that  there  is  a 
possibility  of  getting  the  elevated  structure  removed,  and 
letting  them  keep  the  money,  it  is  a reflection  possibly  upon 
the  justice  with  which  that  has  terminated,  at  least. 

Commissioner  Eastman.  Do  jmu  think  that  all  the  prop- 
erty owners  who  have  been  injured  have  received  compensa- 
tion? Hasn’t  the  damage  extended  beyond  the  immediate 
streets  occupied  by  the  elevated  structure? 

Mr.  Macy.  Not  all  of  them  have  received  it.  Some  on 
the  side  streets  were  injured  to  some  extent,  and  have  not 
received  damages,  but  on  the  other  hand , their  property  has 
been  greatly  benefited  by  the  location  of  the  Elevated  there 
— the  rapid  transit  element  of  it  at  least. 

Now,  I have  one  or  two  suggestions  regarding  the  extent 
of  the  relief.  As  I say,  we  are  unable  to  go  into  the  financial 
situation.  That  belongs,  I presume,  to  the  Public  Service 
Commission. 

But  the  road  is  claiming  a 6 per  cent  income  upon  its 
capital,  and  if  I am  right,  the  general  rule  for  estimating  the 
income  allowed  to  public  service  corporatiorts  throughout 
the  United  States  has  never  gone  as  far  as  to  give  them  a 
6 per  cent  or  7 per  cent  income  upon  their  actual  capital. 
By  every  authority  I think  the  depreciation  of  the  road  and 
the  past  losses  which  usually  result  in  a depreciation  of 
the  road  — for  they  come  out  usually  of  the  plant  — should 
be  deducted,  and  in  this  case  if  the  road  is  granted,  as  it 
asks,  a 6 per  cent  revenue  upon  the  actual  stock  and  bonds 
issued  and  outstanding,  without  any  inquiry  into  losses,  there 
is  danger  of  course  of  shifting  the  burden  upon  the  public 
of  all  past  losses  on  the  road,  not  to  be  paid  from  time  to 
time  but  to  be  capitalized,  not  to  be  paid  for  out  of  an 
increase  of  rates  for  a period  of  time,  but  to  be  capitalized 
and  put  out  as  a permanent  capital. 


88 


BOSTON  ELEA^ATED  RAILWAY. 


[Mar. 


For  instance,  take  the  possible  depreciation  of  rolling  stock 
or  of  its  power  plants.  As  I understand  it  the  company  is 
asking  now  to  put  out  some  53,000,000  of  new  capital  for 
rolling  stock,  power  plants  and  such  new  facilities.  If  those 
should  have  been  taken  care  of  in  the  past,  if  that  is  going 
out  as  capital  to  restore  or  to  replace  rolling  stock,  which  is 
worn  out,  it  means  that  the  depreciation  of  the  past,  instead 
of  being  taken  care  of  out  of  revenue,  is  now  being  cap- 
italized, and  the  public  will  assume  it,  and  assume  the  duty 
of  paying  6 per  cent  on  that  new  capital,  and  permanently. 

And  so,  as  regards  the  West  End- stock;  by  granting  a 
6 per  cent  dividend  to  the  Boston  Elevated  Railway,  you  are 
granting  a 7 and  8 per  cent  dividend  to  the  old  West  End 
stockholders,  at  least  the  owners  of  preferred  stock. 

So,  we  say  that  if  in  this  present  proceeding  the  result  is 
that  the  entire  burden  of  the  past  losses  of  the  road,  for  there 
are  losses  which  are  now  in  the  form  of  depreciation,  are 
shifted  to  the  public,  it  should  be  done  by  an  arrangement 
which  is  only  tentative  and  temporary,  and  should  not  be 
considered  to  be  a permanent  recapitalization  of  the  road, 
so  as  to  bind  the  public  for  the  future. 

The  policy  of  throwing  the  risk  of  losses  of  a public-service 
corporation  upon  the  public  seems  to  be  the  policy  upon 
which  the  claim  of  the  Boston  Elevated  Railway  Company 
in  this  printed  statement  goes  forward.  That  policy  must 
result  in  a system  that  is  rather  an  anomaly.  It  results  in  a 
company  managed  by  private  persons  and  with  private 
capital  invested,  having  its  income  guaranteed  by  the  public 
without  an  immediate  or  direct  control  of  the  system  in  the 
matter  of  the  details  of  expenses. 

The  proposition  that  the  company  is  making  at  the  i)resent 
time,  that  some  arrangement  be  made  whereby  out  of  sub- 
way rentals  there  shall  be  a deduction  each  year  sufficient  to 
give  them  6 ])er  cent,  of  course  throws  the  entire  risk  of  loss 
by  mismanagement  and  otherwise  uj)on  the  ])ublic.  And  it  is 
for  the  Commission  to  consider  how  far  that  should  be  done, 
at  least  by  any  more  than  a temj)orary  or  tentative  arrange- 
ment. 

The  system  that  we  have  when  we  do  that,  when  we  allow 


1917.] 


HOUSE  — No.  1875. 


89 


them  to  control  the  road  in  their  own  way,  especially  when  it 
comes  to  rates  of  wages  to  employees  and  salaries  and  such 
matters,  which  I understand  the  Public  Service  Commission 
does  not  attempt  to  control,  is  simply  that  they  have  their 
own  discretion  as  to  what  the  expenses  shall  be,  and  the 
public  pays  the  bill.  That  would  be  the  system  apparently 
that  would  result  if  the  claim  of  the  company,  or  its  policy 
should  be  followed  out. 

Commissioner  Ellis.  Mr.  Macy,  could  not  that  relief  be 
made  contingent  each  year  upon  an  improvement  in  the 
operation  of  the  road  in  such  a way  as  to  obviate  that  ob- 
jection? 

Mr.  Macy.  I think  it  could. 

Commissioner  Ellis.  By  some  competent  public  author- 
ity. 

Mr.  Macy.  I think  it  could.  But  there  is  another 
suggestion  there:  If  the  public  is  going  to  guarantee  the 
bills  of  the  Elevated  Company,  morally  if  not  legally,  why 
should  they  go  on  and  pay  6 per  cent  on*  private  capital? 

By  substituting  public  money  they  can  get  it  for  4 or 
4^  per  cent.  If  the  policy  is  carried  out  as  it  is,  without 
carrying  it  to  the  end,  you  have  a system  without  any  of  the 
advantages  of  public  ownership  and  without  any  of  the 
advantages  of  private  ownership.  As  I understand  it  the 
advantages  supposed  to  accrue  from  public  facilities  under 
private  ownership  are  efficient  management,  and  to  pay 
dividends  to  private  stockholders.  The  advantage  of  public 
ownership  would  be  a saving  in  funds.  You  have  a system 
with  all  the  disadvantages  of  each.  If  you  have  private  con-' 
trol  and  private  capital,  and  the  public  guaranteeing  the-  in- 
come, without  taking  any  control  — any  immediate  control  at 
least,  — you  will  have  the  disadvantage  of  a lack  of  efficiency 
and  a lack  of  motive  of  earning  as  large  a dividend  as  pos- 
sible, which  is  supposed  to  be  efficient  management  of  a 
privately  owned  facility.  So  that  the  policy  must  apparently 
go  further  than  to  leave  the  system  in  that  way.  It  must 
go  — if  the  public  is  going  to  guarantee  the  bills,  then  it 
must  assume  a larger  measure  of  control. 

Now,  as  to  the  specific  reliefs  suggested  by  the  Elevated 


90 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 

Road,  there  is  one  that  seems  to  us  quite  equitable,  that  the 
company  has  not  apparently  insisted  on,  and  that  is  a 
shifting  of  the  burden  of  repaving  between  tracks,  or  keeping 
the  paving  between  tracks  in  order  as  a part  of  the  paving 
of  the  street. 

There  was  a timxe  when  the  horses  wore  out  the  paving 
between  the  tracks,  and  it  seemed  equitable  to  require  the 
company  to  repave  in  that  portion  or  keep  that  in  repair. 
But  under  our  present  trolley  system  we  have  simply  the 
case  of  a city  determining  to  repave  the  street  and  com- 
pelling the  company  to  repave  in  the  track  because  the  city 
desires  an  improved  form  of  paving.  And  as  that  is  a part 
of  the  expense  of  paving  the  street,  it  should  be  considered 
as  a part  of  that  work;  and  the  policy  of  figuring  it  in  in 
that  way  would  let  the  public  know  a little  more  about  what 
it  really  costs,  because  I understand  that  in  some  of  these 
new  pavements  which  require  additional  and  expensive 
underpinning,  if  that  is  the  right  term,  the  cost  of  taking 
care  of  that  portioil  of  the  track  is  a considerable  item  in  it 
and  should  be  taken  care  of. 

We  agree  that  the  $500,000  deposited  with  the  State 
should  be  returned  to  the  company  as  part  of  the  capital  of 
the  company,  not  of  course  for  general  exq^enses  but  as  a 
capital  fund. 

We  agree  that  the  policy  of  enclosing  the  spaces  in  which 
transfers  take  place  would  be  a good  ojie,  and  is  a sound 
suggestion,  except  of  course  the  consideration  that  would 
come  to  the  officials  of  the  company  as  quickly  as  to  any  one 
else,  that  in  certain  places  the  expenditure  or  capital  re- 
quired to  enclose  such  areas  may  involve  a greater  burden 
than  you  can  possibly  gain  by  ])reventing  the  cheating 
which  goes  on  in  the  use  of  transfers.  That  is  a matter  of 
detail,  and  if  any  money  can  be  saved  we  would  like  to  have 
it  done. 

We  also  advocate  the  taking  over  by  the  State  of  the 
Cambridge  subway,  which  would  result  in  the  saving  of 
$170, ()()()  a year,  and  as  the  deficit  of  191()  was  only  $228, ()()() 
over  the  0 ])er  cent  that  the  com])any  claims,  that  remedy 
alone  by  reducing  the  cost  of  the  (’ambridge  subway,  added 


1917.] 


HOUSE  — No.  1875. 


91 


to  one  or  two  other  items  which  are  clearly  items  of  saving, 
would  make  up  the  entire  deficit  of  1916. 

Now,  the  question  remains,  as  to  whether  if,  after  those 
reliefs  are  given,  if  after  those  savings  are  had  or  savings 
in  other  ways  could  be  had  which  we  would  advocate  before 
any  large  proposition  was  put  forward,  it  would  be  a proper 
thing  to  rebate  the  subway  rentals  out  of  the  taxes.  I 
understand  it  is  a proposition  to  rebate  the  rentals  of  the 
subways  out  of  the  taxes,  which  is  equivalent  to  a guarantee 
by  the  public  of  6 per  cent.  Any  deficit  which  is  bound  to 
take  place  any  year  between  the  net  revenue  received  by  the 
company  and  the  6 per  cent  revenue  upon  its  stock,  should 
be  met  by  a rebate  that  year  from  the  subway  rentals. 

Commissioner  Allen.  Did  you  say  that  your  society 
advocated  the  purchase  of  the  Cambridge  subway  by  the 
Commonwealth,  or  by  the  city  of  Cambridge?  I don’t  think 
I understood  you. 

Mr.  Macy.  It  seems  to  me  personally  that  it  makes  very 
little  difference  whether  the  State  owns  it  or  the  city.  It 
has  not  been  pointed  out  to  me,  or  has  not  occurred  to  me, 
how  it  makes  much  difference;  whoever  owns  the  subway 
will  simply  own  the  fee,  a straw  man,  a person  to  hold  title, 
and  the  subway  will  be,  I take  it,  under  the  control  of  the 
proper  public  authorities  as  part  of  the  transportation  system 
of  the  metropolitan  district,  and  it  makes  very  little  dif- 
ference to  us  who  takes  the  title  to  the  subway  and  who 
consequently  puts  his  name  on  the  bonds  for  the  payment 
of  it,  or  the  raising  of  the  capital  involved  in  it,  to  tlie 
company. 

Commissioner  Eastman.  What  do  you  think  the  price 
ought  to  be  for  the  Cambridge  subway?  Ought  the  price 
to  be  according  to  the  cost? 

Mr.  Macy.  Well,  as  I understand  it,  the  public  is  in  tlie 
situation  of  having  it  put  up  to  them,  you  may  say,  to  take 
care  of  the  company  at  this  time.  If  we  are  going  to  take 
care  of  the  company  in  order  to  let  them  put  out  new  issues 
of  bonds  and  stock  at  par  without  giving  them  any  exemp- 
tion from  the  law  requiring  that  their  stock  shall  sell  at  i)ar 
before  they  can  put  out  bonds,  if  we  are  going  to  do  that. 


92 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


what  difference  does  it  make?  If  the  city  of  Cambridge 
should  pay  over  to  the  Elevated  Road  only  a part,  or  not 
the  full  amount  that  the  subway  has  cost,  it  means  that 
the  rest  'of  it  is  borne  by  the  public.  The  income  of  those 
bonds  that  remain  and  are  not  taken  care  of  must  be  paid 
by  the  public,  and  if  it  is  so,  why  not  ship  them  to  the  city 
of  Cambridge  or  to  the  State  and  get  a less  rate  of  interest 
on  them?  It  is  simply  a question  as  far  as  I can  see  it  of 
the  saving  of  interest  on  the  bonds.  They  are  out  and  ac- 
cording to  the  proposition  we  have  before  us,  the  public  has 
got  to  pay  the  interest  on  them. 

Commissioner  Noyes.  Apparently,  Mr.  Macy,  you  and 
your  association  have  given  this  a great  deal  of  thought  and 
care,  but  you  have  overlooked  apparently  that  a great  deal 
of  the  Elevated  stock  was  put  out  under  the  jurisdiction  of 
a controlling  commission  at  a great  deal  above  par,  and  that 
a 6 per  cent  return  on  par  is  not  really  a 6 per  cent  return 
but  only  about  5.2  per  cent  or  something  of  that  kind. 

I think  that  loses  force  in  your  argument  that  the  public 
should  stand  back  of  6 per  cent.  As  I understand  it  the 
Elevated  cannot  put  out  its  stock  at  less  than  par  and  no 
one  will  pay  par  for  it  when  it  can  be  bought  in  the  market 
at  81  or  82. 

Mr.  Macy.  That  simply  results  from  a provision  of  law. 

Commissioner  Noyes.  That  is  the  provision  of  law  and 
no  one  will  buy  it  and  pay  par -for  it  when  they  can  get  it, 
all  they  want  of  it,  at  82. 

Mr.  Macy.  I don’t  suggest  this  as  a proper  course,  but 
to  answer  your  question  it  don’t  seem  to  me  that  the  com- 
pany can  say  — You  have  got  to  give  us  enough  income  to 
make  a 6 ])er  cent  return.  Of  course  the  State  can  exempt 
them  from  the  provisions  of  the  law  relative  to  sale  of  stock 
and  bonds,  or  the  State  can  guarantee  the  stock  or  bonds 
which  would  enable  them  to  secure  the  funds  at  a much 
lower  charge.  I am  not  an  expert  on  that,  and  it  is  for  the 
Commission  to  consider,  but  I want  to  answer  your  question. 

Commissioner  Noyes.  Well,  my  point  is  that  on  the 
stock  and  bonds,  and  especially  the  stock,  the  return  i)aid  at 
0 ]>er  cent  would  not  really  be  a 0 per  cent  return  on  the 
investment. 


1917.] 


HOUSE  — No.  1875. 


93 


Mr.  Macy.  At  the  same  time  those  who  invested  in 
stock  above  par  — 

Commissioner  Noyes.  At  155  we  will  say. 

Mr.  Macy.  Yes.  They  were  investing  in  a 6 per  cent 
stock.  They  were  willing  to  pay  more  for  it  because  they 
were  willing  at  that  time,  considering  the  security  behind  it, 
to  take  it  at  a less  rate  of  income.  So  that  all  they  are 
entitled  to  at  the  present  time,  if  anything,  is  the  amount 
which  they  invested  in  stocks,  the  amount  of  income  which 
they  were  contented  to  take  it  at,  which  is  maintained  of 
course  if  the  6 per  cent  income  at  par  is  given. 

Commissioner  Eastman.  That  is  true. 

Commissioner  Ellis.  May  I also  call  your  attention  — 
you  talked  of  a State  guaranty  and  the  suggestion  of  the 
Elevated  is  not  for  a complete  guaranty  but  a partial  one, 
either  to  the  extent  of  the  taxes  or  of  the  subway  rentals 
or  both.  There  has  been  no  proposition  yet  of  a complete 
State  guaranty  that  I am  aware  of,  but  only  as  a guaranty 
in  which  the  State  is  to  refund  certain  taxes  or  subway 
rentals,  or  of  both.  Would  not  that  have  an  important 
bearing?  It  is  not  a complete  State  guaranty  as  when  you 
buy  a Massachusetts  bond. 

Mr.  Macy.  If  you  have  a certain  statute  which  says  that 
some  public  body  shall  rebate  each  year  enough  to  make  up 
6 per  cent  income  for  that  year,  that  is  really  a State  guaranty. 

Commissioner  Ellis.  To  the  extent  of  the  taxes.  That 
is  my  point. 

Mr.  Macy.  We  should  hope  that  that  would  not  use  up 
the  whole  amount.  It  is  limited  to  the  amount  of  taxes  they 
pay,  but  we  hope  they  would  not  exceed  it.  We  assumed 
that  was  a large  fund  on  which  the  company  might  draw 
each  year  under  their  suggestion.  If  there  is  any  possibility 
of  their  ever  wanting  to  go  above  that  amount  of  course 
there  should  be  that  limit.  But  the  last  suggestion  that  we — 

Commissioner  Eastman.  Mr.  Macy,  what  advantages  do 
you  think  that  the  State  would  have  to  undertake  this  mat- 
ter, to  guarantee  the  securities  in  order  to  bring  the  price  of 
the  stock  at  par  in  order  to  enable  them  to  issue  new  stock 
at  par? 


94 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  AIacy.  If  you  had  a legal  guaranty  by  the  State  of 
the  dividends,  it  is  possible  that  you  would  not  have  to  pay 
more  than  5 per  cent. 

Commissioner  Eastman.  Do  you  think  the  arrangement 
proposed  would  bring  the  price  considerably  above  par? 

Mr.  Macy.  Well,  I hardly  feel  qualified  to  make  any 
suggestion  regarding  that.  The  purchasers'  of  the  bonds  or 
stock  might  not  know  or  realize  that  there  was  that  guar- 
anty behind  it,  and  it  might  be  that  a 6 per  cent  income 
would  be  necessary.  I am  afraid  I cannot  suggest  anything 
more  helpful  or  anything  that  would  not  occur  to  the  Com- 
'mission  on  that  point.  It  would  take  a banker  to  answer 
that,  and  we  have  agreed,  I presume,  that  it  would  take  a 6 
per  cent  dividend  to  restore  the  stock  to  par.  If  it  sells 
above  that  the  company  would  get  the  benefit  of  the  premi- 
ums. 

Now,  in  regard  to  this  rebate  of  enough  to  make  up  the 
deficit,  if  the  Commission  should  adopt  that  suggestion,  then 
we  urge  that  some  more  intimate  control  by  public  authori- 
ties of  the  details  of  the  management  is  necessary.  It  is 
scarcely  reasonable  to  ask  that  the  public  shall  practically 
guarantee  the  revenue  asked,  no  matter  what  deficit  may 
exist  in  the  year,  without  some  control  of  the  expenses. 

Of  course  the  Public  Service  Commission  we  know  has  a 
general  supervision,  but  there  are  some  things  of  course  that 
the  Public  Service  Commission  cannot  take  care  of.  For 
example,  the  public  has  nothing  to  say  as  to  the  wages  that 
are  paid  by  the  company,  which  seems  to  be  the  greatest 
item  of  increase  of  expense.  Of  course  it  is  merely  for  the 
company  to  say,  “We  will  grant  such  and  such  an  increase  to 
save  trouble,  and  the  public  bears  the  expense,”  and  so  with 
regard  to  salaries  of  officials  and  other  expenses;  and  I 
suggest,  although  I have  not  talked  this  over  with  the  com- 
mittee, but  the  suggestion  comes  to  me,  that  an  officer  or 
representative  of  the  metropolitan  district  or  of  the  State,  who 
might  be  in  the  nature  of  a commissioner  of  efficiency,  should 
be  put  directly  into  the  Elevated  offices.  An  expert  in 
financial  matters  and  an  expert  in  railroading,  at  a consider- 
able salary,  should  be  j)ut  right  into  the  comj)any’s  offices  as  a 


1917.] 


HOUSE  — No.  1875. 


95 


commissioner  of  economy,  to  represent  the  State  if  such  a 
plan  as  that  is  adopted. 

Commissioner  Eastman.  What  authority  would  you  give 
him? 

Mr.  Macy.  The  duty  of  reporting  once  a month  to  the 
Public  Service  Commission  such  recommendations  as  he  can 
make,  and  perhaps  the  duty  every  month  of  reporting  such 
recommendations  or  suggestions  as  he  has  made  to  the 
officers  of  the  company. 

Commissioner  Eastman.  You  would  not  give  him  any 
direct  authority — ^you  would  not  give  him  authority  to  veto 
an  increase  in  wages,  would  you? 

Mr.  Macy.  Not  at  all,  but  I would  rather  have  him 
there  giving  attention  to  the  details,  and  in  touch  with  them, 
than  to  have  a couple  of  political  appointees  sitting  on  the 
Board  of  Directors,  which  has  been  suggested. 

Commissioner  Eastman.  Who  would  appoint  this  man? 

Mr.  Macy.  I should  suggest  that  the  Public  Service  Com- 
mission do  so. 

Commissioner  Eastman.  Suppose  he  thought  the  salaries 
were  too  high.  What  should  he  do? 

Mr.  Macy.  Report  the  fact  to  the  Public  Service  Com- 
mission and  consequently  to  the  public.  That  would  be  the 
only  answer  I could  give  to  that. 

Commissioner  Ellis.  It  might  reduce  the  amount  of 
State  aid  to  that  extent. 

Mr.  Macy.  Yes,  but  I have  said  we  feel  that  we  are  only 
on  the  surface  of  this  subject.  You  gentlemen  are  giving  it 
an  investigation,  and  I feel  that  anything  I can  say  here  is 
merely  a superficial  truth.  So  far  as  those  suggestions  repre- 
sent the  general  view  in  our  association,  I offer  them  for 
what  they  are  worth. 

Senator  Bates.  I think,  Mr.  Macy,  that  the  public  ought 
to  be  grateful  to  you  for  the  gratuitous  work  that  you  have 
put  into  this  matter,  and  I am  sure  the  Commission  are. 

Mr.  Macy.  Thank  you. 

Senator  Bates.  You  made  one  new  suggestion  about 
paving  the  streets,  and  1 wondered  how  fully  you  had  con- 
sidered that.  It  is  true  that  the  horses  don’t  wear  out  the 


96- 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


streets  any  more,  but  isn’t,  it  true  that  the  Elevated  do 
appropriate  a certain  part  of  the  streets  and- can  keep  others 
off  of  their  portion?  And  they  do  exempt  that  part  of  the 
street  from  public  use.  If  they  do,  why  should  not  they 
pave  that  part? 

]Mr.  Macy.  Then  why  should  you  have  it  paved  with  the 
same  kind  of  paving? 

Senator  Bates.  As  a matter  of  proper  construction  you 
have  to  have  the  same  kind  of  paving  in  one  part  of  the 
street  that  you  do  in  another.  If  the  Elevated  don’t  pay 
anything  for  the  streets  in  the  first  place,  isn’t  it  fair  that 
they  should  contribute  to  the  paving? 

Mr.  Macy.  Your  point  is  that  the  spaces  between  the 
tracks  are  used  less  than  the  other  portions  of  the  street? 

Senator  Bates.  In  crowded  portions  of  the  city  it ‘is 
practically  monopolized  by  cars,  and  the  pedestrians  and 
teams  have  no  use  practically  of  that  portion. 

Mr.  Macy.  But  if  the  public  require  the  company  to  keep 
them  paved,  it  seems  to  me  that  the  cost  of  the  work  should 
be  regarded  as  a part  of  the  construction  of  the  street. 

Senator  Bates.  Has  your  society  considered  the  argu- 
ments and  come  to  that  conclusion?  That  is  what  we  want 
to  know. 

Mr.  Macy.  Perhaps  I should  not  have  put  forth  the  sug- 
gestion of  the  burden  of  removal  of  this  paving  between  the 
tracks  from  the  association.  The  other  matters  are  matters 
upon  which  they  have  agreed.  In  this  matter  of  replacing 
the  street,  repaving  the  street,  perhaps  I should  assume  the 
personal  responsibility  for  that.  I think  the  most  of  the 
committee  would  support  it,  but  may  be  one  or  two  would 
not. 

Representative  Lawler.  Has  your  association  taken  uu 
the  matter  of  abolishing  the  8-cent  check?  I don’t  think  you 
touched  on  that. 

]\Ir.  ^Iacy.  Our -committee,  I think,  did  agree  in  a general 
way  that  the  S-cent  check  could  be  abolished  without  in- 
justice. But  we  feel  also,  and  I know  I feel  that  there  are 
communities,  especially  interested  in  that  which  ought  to 
have  a hearing.  It  is  a matter  of  si)ecial  and  jjrivate  inter- 
ests to  certain  communities,  and  they  ought  to  be  heard. 


1917.] 


HOUSE  — No.  1875. 


* 97 


Representative  Lawler.  Did  your  association  take  that 
matter  up  and  vote  on  it,  do  you  remember? 

]Mr.  ]Macy.  You  mean,  on  the  8-cent  check? 

Representative  Lawler.  Yes. 

Mr.  Macy.  No,  none  of  these  propositions  specifically 
have  been  voted  on  by  the  whole  association.  So  far  as  I 
have  been  directed,  it  has  been  l)y  a committee. 

Representative  Lawler.  Did  the  committee  vote  in 
favor  of  it? 

]Mr.  Macy.  Mr.  Aferrick  and  ]Mr.  Delano  are  here.  Mr. 
]\lerrick  said  we  did  agree  to  abolish  the  8-cent  check. 

Commissioner  Macleod.  ]Mr.  Macy,  did  your  association 
consider  or  take  any  action  relative  to  the  general  policy, 
either  of  public  ownership  or  of  a modified  form  of  public 
control  such  as  is  found  in  the  city  of  Cleveland? 

]\lr.  IMacy.  Simply. as  I have  stated,  that  the  committee 
in  a general  way  feels  that  there  should  })e  a further  control 
if  this  scheme  goys  through  of  practically  guaranteeing  the 
inconm  to  a certain  amount.  If  your  question,  Mr.  Macleod, 
has  to  do  with  the  possibility  of  some  special  commission 
controlling  the  road,  I don’t  think  that  we  have  considered 
that,  if  that  is  what  is  in  your  mind. 

Commissioner  IMacleod.  That  was  one  of  the  things 
which  I had  in  mind,  and  I had  also  assumed  that  an  in- 
quiry of  this  sort  would  raise,  or  perhaps  ought  to  raise,  some 
kind  of  a rather  careful  consideration  of  the  general  problem 
of  pu})lic  ownership. 

^Ir.  IMacy.  And  that  is  wliy  we  have  urged  that  any 
arrangement  of  tins  sort  should  be  merely  tentative  and  })ro- 
visional;  that  the  entire  question  has  to  be  gone  through 
some  time  and  the  whole  matter  ])hiced  on  ii  new  basis. 
The  consolidation  of  the  roads,  the  recapitalization,  and  all 
those  questions  should  remain  open  until  the  time  comes  for 
a solution  of  the  entire  problem. 

We  cannot  recommend  a j)eri)etual  guaranty  by  the  rebate 
of  rentals  or  any  other  form,  to  tlie  extent  of  b j)er  cent 
dividends,  and  we  feel  if  such  a systcTu  is  ado])ted  it  should 
involve  a greater  measure  of  pu})lic  control.  Whether  a new 
com.mission  is  neces.sary,  re])re.senting  the  metro])olitan  dis- 
trict, we  cannot  of  course  say. 


BOSTON  ELEVATED  RAILWAY. 


98  ’ 


plar. 


Representative  Donovan.  Did  I understand  you  cor- 
rectly to  say  that  the  people  of  the  side  streets,  like  Oak 
Street  and  Harvard  Street,  are  compensated  by  the  Elevated 
Road  being  in  the  main  street?  I think  you  said  that  in 
your  argument. 

iVIr.  Macy.  As  you  go  down  a side  street  in  Charlestown, 
doesn’t  it  come  to  the  question  of  at  what  point  does  the 
benefit  of  having  rapid  transit  so  near  offset  the  noise  of 
having  the  Elevated  Road  there? 

Representative  Donovan.  The  only  benefit  we  see  there 
is  to  get  them  up  in  the  morning  when  they  don’t  want  to 
get  up.  I live  down  there  and  that  is  why  I say  so. 

President  Wells.  Any  other  questions?  Thank  you  very 
much. 

Senator  John  E.  Beck. 

We  are  very  much  interested  in  the  8-cent  check,  and  I 
am  very  much  pleased  to  see  how  generous  the  United  Im- 
provement people  of  Boston  are  in  taking  that  away  from  us. 
If  there  is  somebody  else  that  is  going  to  speak  here  to-day 
I would  like  to  have  a day  set  for  Chelsea  that  she  may  come 
over  here  and  present  her  claims  as  to  why  the  8-cent  check 
should  be  retained.  I don’t  want  to  take  the  time  now  if 
there  are  others  who  are  set  to  speak  this  morning. 

President  Wells.  Are  there  any  others? 


Mr.  Charles  T.  Harding. 

My  name  is  Charles  T.  Harding,  and  I am  vice-president 
of  the  South  Dorchester  Improvement  Association  in  Dor- 
chester. We  are  a regularly  organized  improvement  associa- 
tion with  a s])here  of  operations  in  the  southern  portion  of 
Dorchester.  We  have  seventy-one  members  in  good  standing 
and  are  active  in  all  local  interests.  And  I am  speaking  now 
because  we  are  not  members  of  the  United  Imi)rovement 
Association. 

At  our  regular  meeting,  at  whicL  thirty-nine  members  were 
])resent,  held  on  November  7,  it  was  voted  that  the  rej)resent- 
ative  of  the  organization  come  here  before  the  Commission 
and  protest  against  the  raising  of  fares,  the  curtailment  of 
the  service,  and  the  abolition  of  free  transfers  by  the  Ele- 


1917.] 


HOUSE  — No.  1875. 


99 


vated,  in  so  far  as  it  would  affect  the  people  of  Dorchester. 
That  is  all  I have  to  say. 

Commissioner  Macleod.  Was  any  action  taken,  Mr. 
Harding,  by  your  association  with  reference  to  the  other  sug- 
gestions put  forward  by  the  company? 

Mr.  Harding.  No,  Mr.  Macleod.  To  be  frank  with  you, 
I don’t  think  that  the  entire  question  was  thoroughly  under- 
stood. Most  of  the  information  that  they  had  was  gained 
from  the  newspapers,  and  the  membership  were  under  the 
impression  that  transfers  were  to  be  abolished  and  the  fares 
raised,  and  so  they  protested  on  what  they  knew  about  that 
feature  of  it. 

Further  Statement  hy  Mr.  John  E.  Macy. 

Mr.  Chairman,  Mr.  Merrick  of  our  committee  has  re- 
minded me  that  I omitted  to  mention  the  charging  of  de- 
preciation against  premiums.  And  although  we  have  not 
been  able'  quite  fully  to  understand  that,  it  seemed  to  us  that 
it  was  simply  a plan,  by  a system  of  bookkeeping,  to  post- 
pone taking  care  of  depreciation  for  the  present,  or  at  least 
taking  care  of  depreciation  by  reserving  a fund  in  actual 
cash  each  year  out  of  the  income,  to  take  care  of  deprecia- 
tion in  future.  If  that  results  in  any  postponement  of  the 
restoration  of  property  or  the  maintenance  of  property,  from 
time  to  time  simply  charging  off  the  depreciation  against  the 
amount  in  the  books,  we  oppose  it.  We  feel  that  the  main- 
tenance of  the  road  should  go  on  out  of  income  from  year  to 
year. 

Furthermore,  if  it  is  supposed  to  result  in  the  recapitaliza- 
tion of  that  depreciation  in  the  end,  that  is,  by  making  up 
this  fund  again  on  the  books,  out  of  an  issue  of  new  capital, 
then  we  point  out  again  that  that  is  simply  capitalizing 
depreciation,  instead  of  taking  care  of  it  out  of  current 
revenue. 

Commissioner  Eastman.  Mr.  Macy,  if  this  scheme  of  re- 
bating taxes  for  the  purpose  of  guaranteeing  the  dividends 
were  applied  to  the  Boston  Elevated,  do  you  know  of  any- 
thing which  distinguishes  the  Elevated  Railway  from  the 
other  street  railway  companies  in  the  State,  so  that  it  will 


100 


BOSTON  ELE^\\TKI)  BAILWAY. 


[.Mar. 

form  no  precedent  to  the  application  of  the  same  princii)le 
to  all  the  street  railways  in  the  State? 

Mr.  AIacy.  iNIerely  the  fact  that  by  statute  a number  of 
new  burdens  have  been  imposed  upon  the  Elevated  Road  in 
the  form  of  subways  which  are  out  of  proportion  to  their 
income. 

Commissioner  Eastman.  No  burden  has  been  im])osed 
which  has  not  been  A'oluntarily  assumed  by  the  company, 
has  it?  All  of  those  subway  acts  have  been  subject  to  the 
acceptance  of  the  company. 

Air.  AIacy.  I understand  so.  The  Boylston  Street  sub- 
way, the  Washington  Street  tunnel,  and  the  Cambridge 
tunnel  were  all  consented  to,  I understand,  by  the  company. 
But  how  far  they  feel  under  compulsion  to  do  it  is  for  them 
to  say.  The  public  is  getting  the  benefit  at  least,  and  we  are 
willing  that  the  public  should  assume  part  of  the  burden,  so 
far  as  we  are  concerned. 

Raymond  P.  Delano,  Esq. 

Air.  Chairman  and  members  of  the  Special  Commission  — 

Bresident  Wells.  What  is  your  name,  please? 

Air.  Delano.  Raymond  P.  Delano. 

President  Wells.  Representing  anybody  but  yourself  per- 
sonally? 

Air.  Delano.  I do.  I am  president  of  the  Dorchester 
Board  of  Trade  and  appear  by  their  authority,  for  them.  I 
appear  as  chairman  of  the  Legislation  Committee  of  the  Real 
Estate  Brokers  Association  of  Dorchester. 

I happen  to  be  also  a member  of  the  Committee  of  the 
United  Improvement  Association,  but  Air.  AIacy  has  spoken 
for  them,  so  that  1 will  not  speak  for  them,  but  state  that  I 
am  one  of  the  members  of -the  committee  which  studied  the 
matter.  I also  a])i)ear  here  for  the  Peo])les’  Service  League 
of  Alassachusetts. 

I am  not  going  to  take  the  time  of  the  (’ommission  to  go 
into  the  details  of  the  re])()rt  as  ])resented.  We  have  been 
favored  with  a co])y  which  I understand  is  a ])ublic  copy,  for 
the  ])ublic  to  use,  of  the  Elevated’s  case,  and  I have  read 
that  half  of  tlu*  case  very  carefully,  and  where  nccc.ssary  or 


1917.] 


HOUSE  — Xo.  1875. 


101 


where  I thought  it  was  necessary  to  clear  my  mind,  I have 
checked  up  and  verified  or  corrected  to  my  satisfaction  this 
report. 

But  I find  myself  in  this  position  of  having  at  this  time 
only  about  one-half  the  case.  We  have  the  Elevated’s 
statement  showing  that  every  cent  we  can  show  that  they 
have  received  from  revenue,  or  every  cent  of  public  money 
which  has  been  given  into  their  hands  to  spend,  has  been 
spent;  but  as  yet  I liave  no  check  as  to  how  it  has  been 
spent. 

They  say  it  has  been  spent,  and  I understand  that  the 
Public  Service  Commission  supervised  the  spending  of  their 
money,  even  to  the  detail  of  the  Interstate  Commerce  Com- 
mission requirements;  but  I think  that  where  there  are  the 
two  elements  interested,  the  Elevated,  a private  corporation 
doing  a public  service  work,  and  the  public,  and  as  a remedy 
to  be  sought,  I honestly  and  sincerely  and  in  all  faith  suggest 
that  this  Commission  ought  to  have,  and  the  public  ought 
to  have,  a report  of  the  stewardship  of  the  Public  Service 
Commission  during  their  term  of  office,  as  to  how  the  money 
has  been  spent  and  whether  it  has  been  spent  right  or 
wrong  under  our  control. 

Then  we  would  know  where  we  were  at,  and  whether  the 
assumption  that  they  have  properly  spent  the  money  which 
has  been  spent  is  right  and  is  proper  for  us  to  base  our 
suggestions  on.  Until  such  time  as  the  Public  Service  Com- 
mission gives  an  account  of  its  stewardship  I feel  handicapped 
in  making  suggestions.  And  I must  assume  and  you  must  take 
it  in  that  way,  that  I am  re})resenting  the  associations  and 
S])eaking  as  I do,  in  assuming  that  the  Public  Service  Com- 
mission has  given  its  ().  K.,  through  their  investigators,  of 
everything  that  has  happened  u])  to  date. 

(Commissioner  East.max.  Are  you  speaking  of  the  capital 
e.xpenditures  of  the  road? 

Mr.  Delaxo.  Of  the  whole  business.  The  Jhiblic  Service 
(Commission  has  supervision  of  the  entire  business  of  tlie 
Elevated,  of  their  raising  money  and  s])ending  money,  and 
how  it  is  spent.  It  is  my  first  suggestion  that  we  ought  to 
have  that  as  a public  document,  so  that  the  public  may 
have  both  sides  of  the  case  and  get  the  full  story. 


102 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 

Now,  the  second  proposition  may  sound  a little  bit  radical, 
but  when  the  Boston  Elevated  took  over  the  West  End 
properties  under  the  terms  of  their  lease,  they  had  an  in- 
ventory made,  and  it  strikes  me  to-day  that  whether  or  not 
there  has  been  a lot  of  capital  put  in  and  spent,  and  gone, 
or  whether  you  have  overfed  the  Elevated  with  subways  or 
what  its  physical  condition  is  to-day,  we  ought  to  have  a 
blood  test  of  its  property  and  against  its  capital.  You  ought 
to  have  an  appraisal  of  their  property,  and  you  have  got  to 
have  before  you  get  very  far.  If  the  entire  amount  of  de- 
preciation should  be  charged  off  to  premiums,  all  right.  In 
any  case  there  should  be  a blood  test  or  accurate  valuation 
of  the  Elevated  properties  before  you  go  very  far  in  this 
proposition. 

Third,  I don’t  know  whether  it  is  possible  or  not,  I don’t 
know  how  the  West  End  stockholders  feel,  or  how  the  West 
End  officials  would  feel,  or  how  this  Commission  would  feel, 
or  the  State  would  feel;  but  it  seem^  as  though  there  might 
be  enough  public  opinion  brought  to  bear  to  anticipate  the 
agreement  to  be  fulfilled  in  1922,  and  let  the  Boston  Elevated 
buy  now  and  get  the  benefit  of  that  large  sum  of  money 
which  is  lying  there  in  the  West  End,  and  get  the  houses, 
and  the  property  generally,  so  that  they  would  have  a 
further  capital  with  which  to  do  business.  If  both  directo- 
rates have  agreed  to  the  purchase  in  1922,  I don’t  see  why 
it  could  not  be  done  now. 

If  you  are  going,  later  on,  to  relieve  the  Pdevated  by  a 
rebate  or  alleviate  their  needs  by  the  remission  of  their  taxes, 
I would  suggest  a Metropolitan  Transit  Board,  something 
like  the  extension  of  the  Transit  Commission  of  the  city  of 
Boston,  to  cover  the  metro])olitan  district  and  something  along 
the  line  of  the  Metropolitan  Water  and  Sewerage  Board,  to 
control  this  matter. 

The  sid)Ways  of  Boston  are  not  for  Boston  alone.  They 
cover  the  metropolitan  district.  Tlie  best  remedy  would  be 
to  luive  a metroj)olitan  Boston  at  once.  If  you  can’t  have  a 
metropolitan  Boston,  so  that  metropolitan  Boston  can  legis- 
late and  control  this  matter,  then  liave  a metropolitan  com- 
mission of  some  kind  to  control  and  supervise  the  transporta- 


1917.] 


HOUSE  — No.  1875. 


103 


tion  facilities  in  the  metropolitan  district  which  come  within 
this  area,  and  to  work  out  and  supervise  this  readjustment 
and  rebate  of  taxes,  and  to  take  care  of  giving  the  Elevated 
a fair  return  on  a fair  capital  invested. 

The  metropolitan  district  is  interested  in  that,  not  only  the 
Boston  Transit  Commission  or  the  Public  Service  Commis- 
sion. 

Fifth,  if  we  want  more  subways  and  are  urging  more  sub- 
ways, and  I guess  you  are  all  familiar  with  the  fact  that  we 
have  asked  for  a subway  out  in  Dorchester,  and  I guess  you 
know  Dorchester  is  on  the  map  from  attempted  legislation, 
I don’t  think  that  the  New  York  propostion  is  very  bad,  in 
giving  the  Elevated  a chance  to  catch  its  breath  when  it 
assumes  these  subways,  and  let  the  public  carry  it  nominally 
with  no  return  to  the  public,  until  such  time  as  it  has  caught 
up  with  the  times  and  the  income  will  carry  the  subway.  If 
you  want  more  subways,  and  if  you  are  called  upon  to  con- 
sider further  legislation  for  subways,  consider  seriously  the 
New  York  plan  of  leasing  subways  back  to  the  Elevated  here 
in  Boston. 

Commissioner  Eastman.  What  is  your  idea  on  that,  Mr. 
Delano? 

Mr.  Delano.  That  in  future  legislation  let  the  Elevated 
catch  its  breath  and  until  we  get  the  matter  straightened  out 
if  you  have  any  new  legislation  along  the  line  of  subways  or 
increased  burdens  for  the  Elevated  to  bear,  until  such  time 
as  the  Elevated  income  will  enable  them  to  bear  the  burden, 
work  it  out  on  the  equitable  basis  used  in  New  York. 

Commissioner  Eastman.  In  New  York  I think  the  com- 
pany furnished  one-half  the  money  and  the  city  the  other 
half  for  the  new  subways  that  are  being  constructed,  and  out 
of  the  net  income  of  the  company  the  interest  on  the  com- 
pany’s money  is  to  be  paid  first,  and  the  interest  on  the  city’s 
money  to  be  paid  last.  Is  that  it? 

Mr.  Delano.  I think  that  is  a part  of  it.  It  would  take 
an  hour  to  describe  that  contract.  It  is  a very  intricate  one. 
I have  read  it,  and  all  the  reports  on  the  matter,  to  date. 
You  are  right,  that  that  is  a part  of  the  proposition;  but  I 
think  the  entire  contract  has  some  modifications  in  it. 


104 


BOSTON  ELFAWTEI)  UAIEWAY. 


[Mar. 

Oominissioner  M ACLEOD.  Mr.  Delano,  does  your  theory 
contem])late  that  the  city  of  Boston,  for  instance,  should  pay 
the  interest  on  the  subway  bonds  without  getting  any  return 
at  all  from  the  coin])ain'  for  a })eriofl  of  years,  or  do  you 
siin])ly  have  in  mind  the  relie^'ing  of  the  company  of  so 
much  of  the  rentals  as  represents  a sinking  fund? 

Air.  Delano.  1 am  hardly  ])reparcd  to  discuss  that.  It 
is  a })retty  l)ig  question  and  a fairly  intricate  one.  As  I 
remember  tlie  New  A'ork  ])lan,  it  was  that  the  bonds  were 
])aid  for  first,  and  then  other  things  such  as  dividends  or 
rentals  for  the  subways  were  to  be  a later  consideration. 

I would  not  propose  ])aying  the  Elevated  bondholders  in 
full  their  interest,  and  nothing  to  the  city.  It  might  be  that 
they  both  ought  to  get  an  e(}ual  ])art,  whatever  that  might 
be.  I would  have  to  spend  an  hour  and  take  that  particular 
New  A Ork  contract  and  discuss  it  here,  and  I know  you  don’t 
want  to  do  tJiat  now.  But  you  gentlemen  are  qualified  to  do 
tliat  })rivately,  and  in  executive  session. 

As  to  the  zone  system,  I don’t  think  that  the  zone  system 
as  ])ro])osed  here  in  that  brief  of  the  Elevated  is  ]n*acticable. 
I don’t  believe  you  can  work  it  out  in  Boston,  and  as  I 
notice  [map  on  wall]  Boston  and  its  environments  take  on 
ver>'  much  the  sJuipe  of  a wheel,  with  the  hub  s])okes  and 
rim,  and  I })elieve  in  time,  you  luiv(‘  got  to  work  out,  if  you 
are  going  to  have  any  zone  syst(‘m — you  Jiave  got  to  work 
out  a hub  or  free  center  zone,  s})okes  fiu-  tlie  avenues  of 
travel,  and  a rim  or  circle  for  travel,  and  you  cannot  do  it 
in  any  other  way.  Stiuh'  your  natural  arteries  to  the  city, 
the  circidar  streets  leading  from  city  to  village*  and  around 
througli,  and  also  the  avenues  into  the  cit>’,  and  that  will  be 
your  ultimate  development. 

I don’t  know  whether  anything  else  can  be  done,  but  it 
strikes  me  that  the  West  End  securities  ought  not  of  neces- 
sity and  for  all  tim(*s  to  carry  a 7 and  S j)(‘r  cent  return. 
Tliat  is  s()jne  burden  for  the  Elevated  to  carry  and  some 
burden  for  the  ])coi)le  in  turn  to  carry.  With  the  large 
cai)ital  of  the  West  End,  it  strikes  me  that  is  a (juestion 
wheth(‘r  that  partic\ilar  stock  of  SS, 000, ()()()  ought  to  carry 
continnous  dividt'iids  at  7 or  S j)er  ct'iit. 


1917.] 


HOUSE  — Xo.  1875. 


105 


Xow,  as  to  the  proposition  presented  by  the  Elevated  for 
relief,  I am  going  to  answer  those  in  their  order  and  give 
my  reasons  for  them,  and  then  I am  through.  And  I am 
doing  this  upon  the  same  assumption,  that  they  are  entitled 
to  ask  for  these  reliefs  because  I must  assume  until  I get  a 
report  to  the  contrary  from  the  Public  Service  Commission, 
that  what  they  have  done  is  right.  And  then  I am  going  to 
ask  three  questions,  to  throw  open  for  consideration  one  or 
two  new  matters. 

Commissioner  Eastman.  In  order  to  correct  a misappre- 
hension in  regard  to  the  duties  of  the  Public  Service  Com- 
mission: The  Public  Service  Commission  does  have  super- 
vision over  the  issues  of  stock  and  bonds  and  the  right  to 
supervise  the  expenditures  of  the  proceeds  of  the  issues,  but 
it  has  jio  supervision  over  the  operating  expejises  of  the 
company.  It  has  the  right  to  investigate  those  operating 
expenses  but  not  to  prescribe  what  they  shall  be. 

IMr.  Delano.  Well,  that  is  fine.  I think  a lot  of  people 
have  inherited  the  idea  in  railroading  that  there  is  a whole 
lot  of  water,  and  that  a lot  of  things  have  happened,  ajid 
whenever  it  is  the  railroad,  it  is  full  of  water  and  there  is 
bound  to  be  a shrinkage,  and  you  have  got  that  attitude  of 
the  public  mind  to  cope  with.  The  average  man  does  not 
study  these  things  but  jumps  at  the  conclusion  that  the 
railroad  is  correct.  If  you  are  a public  service  commission 
and  you  are  dealing  with  the  public  mind,  and  you  have  the 
duty  to  investigate,  you  also  have  the  duty  to  report  and 
apprize  the  ])ublic,  so  that  they  may  iji  tuni  get  as  nearly 
as  possible  a fair  ])ers];ective  of  your  work,  a fair  ])ers})ec- 
tive  of  the  company’s  business,  and  then  as  nearly  as  possible 
give  just  consideration  to  the  Jieeds  and  the  demands  of  the 
Boston  Elevated  Bail  way. 

The  increase  in  the  rate  of  fare:  Xo. 

The  adoption  of  the  so-called  zone  system  of  fares:  Xo, 
not  under  the  present  ])lan.  But  later  something  of  that 
.sort  might  be  worked  out,  ahmg  a comi)rehejisive  i)laji,  the 
hub  and  spoke  plan,  but  not  the  ])resent  system. 

Charging  for  tran.sfers:  That  is  qualified.  As  a general 
proposition,  no;  but  if  the  routing  of  th(‘  cars  is  such  that 


106 


BOSTON  P:LE^  ATED  RAILWAY. 


[:Mar. 


the  public  are  not  able  to  get  a transfer  fairly,  and  if  the 
trip  is  in  a general  direction,  I should  say  no;  but  if  the 
passenger  wants  to  make  a trip  in  two  directions,  and  the 
Elevated  carry  him  to  a central  point,  and  then  he  goes  out 
to  another  point,  he  should  pay  another  fare.  You  cannot 
expect  a taxi  or  a hack  to  take  you  down  town  to  the  center 
of  the  town,  and  then  to  carry  you  to  some  other  portion  of 
the  city,  and  expect  that  it  will  be  without  any  charge  for  the 
remainder  of  the  trip.  You  cannot  expect  that  the  Elevated 
will  give  you  transfer  service  in  every  direction  and  at  any 
time  that  you  may  desire. 

The  enclosed  areas  at  transfer  points,  so  as  to  reduce  the 
number  of  paper  transfers;  I look  with  apprehension  at  that 
because  if  we  get  any  more  of  the  crystal  mazes  such  as  we 
have  at  Dudley  Street,  neither  the  company  nor  the  public 
will  gain  much.  If  there  are  certain  points  where  there  are 
logical  transfer  points,  where  they  will  not  impede  service, 
or  the  speed  at  which  the  passenger  can  get  to  his  destina- 
tion, I think  an  enclosed  area  there  would  be  all  right.  But 
to  get  some  big  areas  somew'here,  and  carry  people  through 
the  maze  and  make  that  much  delay  and  extra  expense,  I 
do  not  believe  it  is  practicable. 

Upon  the  elimination  of  the  S-cent  check:  Yes. 

Refunding  to  the  company  the  cost  of  the  Cambridge 
subway:  Of  course  under  the  terms  of  the  building  of  the 
subway  the  city  of  Cambridge  lias  a first  option  on  it.  It 
may  be  passing  to  a third  party,  but  the  city  of  Cambridge 
must  first  buy  it,  and  then  they  may  sell  it  to  the  jMetro- 
politan  Transit  Commission  or  to  anybody  else  who  will  buy 
it.  But  we  would  favor  relieving  the  Elevated  Company 
of  that  subway. 

The  cpiestion  was  asked  a little  while  ago  as  to  what  price 
should  be  paid.  All  we  can  say,  and  anybody  could  say 
this,  is  that  it  should  be  a fair  price  for  the  subway.  If  the 
city  of  Boston  should  buy  it,  we  do  not  expect  that  it  will 
buy  back  its  own  tunnel  under  Beacon  Hill,  which  is  in- 
cluded in  the  Sl(),()()(), ()()()  cost.  But  for  the  actual  money 
which  the  company  has  spent,  if  that  is  checked  up  and 
found  to  be  a fair  figure,  that  should  be  the  price. 


1917.] 


HOUSE  — No.  1875. 


107 


If  you  find  the  subway  was  built  too  expensively,  and  it 
is  not  worth  what  it  cost,  it  is  for  you  as  a Commission  to 
say  what  that  subway  should  cost.  But  I think  comparing 
that  cost  of  subway  with  the  East  Boston  tunnel  and  others, 
that  the  tube  in  Cambridge  was  built  fairly  near  to  a fair 
price. 

Temporarily  charging  off  depreciation  against  premiums 
paid  on  stock  and  bonds:  I referred  some  time  ago  to  an 
actual  valuation  of  the  road.  You  have  got  some  deprecia- 
tion there.  On  Washington  Street  alone  you  had  $3,000,000 
issue  of  bonds  or  securities  of  the  people’s  money,  whch  went 
into  the  people’s  pocket  for  damages  on  Washington  Street. 
That  took  out  capital  and  left  $47,000,000  of  actual  capital. 
That  money  will  never  come  back  and  when  you  pay  the 
bonds  the  people  have  got  the  money  and  it  is  legitimate. 
It  is  in  accordance  with  the  practice  of  paying  into  capital 
the  purchase  or  the  damage  to  abutting  property. 

As  to  rolling  stock:  All  right.  If  you  need  to  do  some- 
thing about  depreciation,  charge  it  all,  and  let  it  stand  per- 
manently and  not  temporarily.  What  difference  does  it 
make?  It  is  a matter  of  bookkeeping. 

The  return  of  the  $500,000:  Yes.  I understand'  that  all 
the  items  of  the  contract  have  practically  been  completed, 
and  it  is  a mere  matter  of  form  to  get  that  back.  If  the 
State  feel  that  they  have  not,  let  them  file  a temporary  bond 
and  get  that  money  immediately. 

Now,  to  reimburse  the  subway  rentals  is  a proposition 
that  is  all  right  if  it  is  necessary,  provided  the  entire  district 
benefited  pays  its  proportional  part,  and  I should  want  when 
the  balance  sheet  turns  in  favor  of  the  district  which  is  now 
asked  for  relief,  that  they  shall  be  the  beneficiaries  then, 
as  well  as  the  benefactors  now.  Let  it  work  both  ways.  If 
the  railroad  climbs  to  a point  where  it  can  pay  its  taxes  and 
dividends  and  rentals,  have  it  agreed  in  your  contract  that 
when  they  begin  to  make  money,  they  shall  reimburse  us, 
that  then  the  people  who  have  suffered,  waited  and  paid 
money  or  had  their  taxes  increased,  shall,  in  return,  be  the 
beneficiaries  then  as  well  as  the  benefactors  now. 

Commissioner  Allen.  How  would  you  dis, tribute  the 


108 


BOSTON  ELE^^\TEI)  BATLWAY. 


[^hir. 


burden?  On  the  mileage  of  tracks,  or  the  population,  the 
proj)ortion  of  the  people,  or  what? 

'Sir.  Dp:laxo.  I should  say  it  would  apply  more  as  to  the 
number  of  persons  using  the  service  from  that  town  or  city, 
than  it  would  perhaps  to  the  mileage  of  tracks.  Sometimes 
the  mileage  of  tracks  is  a misnomer.  They  might  run  two 
trains  a day  as  they  do  out  on  the  Shawmut  line  where  I 
live,  just  enough  to  keep  the  road  open,  and  still  not  do 
any  business. 

Commissioner  Allex.  You  would  have  the  })roportion 
fixed  by  the  patronage  of  the  road? 

iNIr.  Delaxo.  I would,  yes.  Now  let  me  ask  this,  and 
then  I am  through.  Is  there  any  question  as  to  the  private 
contracts  let  by  the  Elevated?  Such  as  their  advertising 
contract  and  others,  whereby  they  could  .save  money,  if  they 
did  that  business  them.selves,  and  have  a better  balance  sheet 
on  which  to  do  business  and  pay  dividends?  That  is  a fair 
question,  whether  they  could  do  that  or  not.  In  my  own 
office,  if  it  is  the  renting  end  of  the  business,  I turn  it  over 
to  the  young  lady  and  she  has  charge  of  that.  Perhaps  the 
renting  business  could  better  be  handled  in  a different  way 
from  what  they  are  doing.  But  could  the  com})anies  for 
which  the  Elevated  receive  the  revenue,  be  better  handled 
by  turning  them  over  to  others  than  now? 

What  do  Eilene,  Bacon  and  others  j)ay  for  their  i)referred 
entrances?  Do  they  i)ay  enough?  Was  it  fair?  What  are 
the  contracts?  Let  the  public  know. 

flow  much  has  the  retail  district  been  iiistrumental  in 
creating  this  great  traffic  congestion  in  the  heart  of  the  city? 
How  much  should  they  stand  of  the  burden  which  the  j)ublic 
is  asked  to  j)ay  to  relieve  the  Elevated  to-day,  and  until 
such  time  as  it  can  catch  its  breath  and  do  business  at  a 
})rofit?  That  is  a fair  (piestion  to  ask.  Tliey  have  spent  a 
lot  of  money  to  keej)  that  center  the  dum])ing  point  for  all 
outlying  communities  coming  into  the  city.  You  know  it  as 
well  as  1 do.  Just  the  .same  as  State  Street  has  .such  a lot 
of  money  to  keep  that  the  center  of  all  financial  business. 
Why  should  not  those  interests  come  to  the  rescue  and  })ay 
their  })roj)ortional  part,  and  not  tax  it  on  the  suburbanite 


1917.] 


HOUSE  — Xo.  1875. 


109 


who  is  paying  his  fare,  who  is  paying  the  store  for  all  that 
he  buys?  I believe  that  the  big  stores  who  have  created  the 
burden  should  pay  part  of  the  expense  at  this  time.  I 
leave  that  for  your  Commission. 

Senator  John  E.  Beck. 

I would  like  to  discuss  that  8-cent  check.  They  call  it 
over  in  Chelsea  the  “little  green  devil.” 

You  know  what  Ve  are  up  against  over  there.  The  Public 
Service  Commission  is  acquainted  with  the  facts.  We  have 
two  lines  of  cars  there.  The  Elevated  serves  the  east  side  of 
Chelsea  running  from  East  Boston  up  to  Gerrish  Avenue, 
and  the  Bay  State  covers  the  larger  territory.  You  are 
aware  that  for  years  we  have  introduced  legislation  to  secure 
a 5-cent  fare  in  the  end;  the  passage  of  a bill  vdiich  would 
permit  the  street  railway  companies  to  lease  part  of  their 
lines  one  to  the  other.  That  was  passed  here  and  I think  the 
Chelsea  representatives  and  their  senator  were  instrumental 
in  securing  that  legislation.  But  up  to  the  present  time 
nothing  has  been  achieved  and  we  are  still  in  the  same  posi- 
tion as  we  were  many  years  ago. 

When  the  cojisolidation  of  the  West  End  took  place,  that 
was  the  time  when  the  old  Lynn  & Boston  ought  to  have 
been  made  a part  of  the  consolidation.  IMr.  Henry  M. 
Whitney,  president  of  the  road  at  that  time,  told  me  that 
they  made  a great  mistake;  but  the  people  are  not  to  blame 
for  that.  Our  representatives  ought  to  have  seen  to  it  that 
we  were  made  a part  of  that  system.  Now,  the  Lynn  & 
lL)ston  has  gojie  to  the  Bostoji  ik  X'orthern,  and  has  since 
become  a part  of  the  Bay  State  Street  Railway  Company. 

There  is  a difference  of  opinion  there,  and  we  cannot  bring 
the  two  companies  together  and  we  have  to  suffer  for  it.  The 
only  thing  that  we  have  at  the  ])resent  time  in  the  matter  of 
reduced  fares,  without  paying  10  cents,  is  this  8-cent  check, 
and  we  are  treated  unfairly  as  to  that.  We  can  buy  it  oji 
the  street  in  Boston,  but  not  in  the  subway  or  tunnel  sta- 
tions. If  we  board  the  car  at  Essex  Street  or  Dover  Street, 
we  have  to  j)ay  straiglit  fares.  AVe  cannot  buy  an  8-cent 
check  except  on  the  surface  cars. 


110 


BOSTON  ELEVATED  RAIIAYAY. 


[:Mar. 


We  feel  that  Chelsea,  being  nearer  to  Boston  than  Dor- 
chester, we  might  say  nearer  than  many  places  in  greater 
Boston,  is  handicapped  by  this  fact,  of  not  being  able  to  go 
further  than  Scollay  Square  for  5 cents,  and  the  only  way  we 
can  obviate  that  is  through  the  8-cent  check. 

We  are  opposed  to  taking  away  the  8-cent  check,  and  I 
am  astonished  to  see  the  United  Improvement  Association,  or 
any  other  body  in  Boston  who  pretends  to  be  so  big  when 
they  come  before  the  Legislature  for  subways,  come  in  here 
and  say  that  they  are  in  favor  of  the  abolition  of  8-cent 
transfers. 

You  know  the  fight  that  was  made  to  get  the  West  Rox- 
bury  5-cent  fare,  and  yet  they  are  further  away  than  Chelsea, 
and  they  got  it.  But  we  are  burdened  with  a 10-cent  fare, 
or  8-cent  check,  and  I am  astonished  to  see  people  come  in 
here  like  these  organizations,  considering  only  their  own  wel- 
fare, and  letting  other  parts  of  greater  Boston  go  without 
any  consideration. 

I do  hope  that  the  Commission  will  see  to  it  that  Chelsea 
and  Revere  are  protected  in  this  matter.  While  the  Bay 
State  covers  a part  of  Everett,  both  lines  cover  the  principal 
parts  of  that  city.  They  have  service  on  both  lines,  but 
Chelsea  has  not  got  that.  We  have  the  small  part  covered 
by  the  Elevated  which  runs  through  the  easterly  part  of 
Chelsea.  We  are  glad  to  have  it  and  it  has  been  a great 
help.  And  you  kjiow  that  the  only  way  we  can  get  rapid 
transit  is  through  the  tunnel. 

We  have  three  drawbridges  to  cross.  Mystic  River  is 
being  developed  more  and  more.  A new  draw,  one  of  the 
largest  in  the  country,  has  been  built  there,  and  to  swing 
which  it  takes  about  twice  as  long  as  the  old  draw.  Tliose 
things  are  hindrances.  It  is  nothing  uncommon  for  a man 
from  Chelsea  to  be  held  up  by  the  three  drawbridges,  and 
that  is  quite  a hardship.  And  then,  to  thijik  that  we  may 
lose  this  other  method  of  coming  to  Boston  for  8 cejits. 

The  cry  has  been  right  along  and  the  o])position  to  it  has 
been  against  an  increase  from  5 cejits.  My  friend  Delano 
and  others  say,  “No,  we  don’t  want  any  increase  in  the 
5-c*ent  fare.  But  old  C’helsea,  — she  can  ])ay  10.  What  do 
we  cure  about  old  C’helsea?  I>et  her  ])ay  twice." 


1917.] 


HOUSE  — Xo.  1875. 


Ill 


And  I want  to  say,  Mr.  Chairman,  that  I represent  Mayor 
James  H.  Malone,  who  is  strongly  opposed  to  this,  and 
believes  it  is  entirely  unfair.  This  is  a matter  which  affects 
us  vitally.  With  rapid  transit  you  can  see  what  it  means  to 
Chelsea.  We  have  a great  deal  of  vacant  land  over  there, 
a great  deal  of  the  land  which  was  burned  over  is  idle,  and 
w’e  offer  good  opportunities  for  building.  We  have  every- 
thing to  offer  except  that  we  are  handicapped  in  the  matter 
of  rapid  transit  in  Boston.  And  the  little  w^e  have  got  we 
donT  want  to  give  up,  and  I am  here  to  object  to  it. 

We  have  been  trying  for  many  years  to  get  a 5-cent  fare, 
and  there  is  no  way  that  we  can  solve  the  problem,  as  the 
Public  Service  Commission  will  recognize.  They  tried  to  do 
it,  and  the  only  way  it  can  be  done  is  to  bring  the  Boston 
Elevated  and  the  Bay  State  together  and  there  is  no  way 
that  we  can  compel  the  Boston  Elevated  alone  to  lease  the 
lines  of  the  Bay  State  in  Chelsea  and  Revere.  The  Bay 
State  cannot  very  well  lease  the  lines  of  the  Elevated. 

The  other  solution  is  the  consolidation  of  both  companies. 
We  thought  that  might  occur,  and  that  then  the  zone  system 
would  be  put  into  effect.  In  that  case  we  would  get  a 5-cent 
fare,  we  think. 

That  is  my  protest  and  I want  to  enter  my  protest  and 
the  protest  of  the  city  of  Chelsea  against  the  abolition  of  the 
8-cent  check. 

Senator  Bates.  I want  to  ask  the  Senator  how  much  the 
practice  of  using  the  8-cent  check  for  a return  trip  now  ob- 
tains in  Chelsea.  It  is  represented  to  us  that  a great  many 
people  in  Chelsea  get  an  8-cent  check  in  the  morning  and  use 
it  at  night.  How  much  of  that  is  done  do  you  think? 

Mr.  Beck.  I notice  on  the  main  line,  Washington  Avenue 
line,  a great  many  people  buy  the  8-cent  check  and  a great 
many  people  get  off  at  Bellingham,  which  is  the  connecting 
place  for  the  Boston  Elevated- 

Senator  Bates.  Supi)ose  they  have  an  enclosed  area 
there? 

Mr.  Beck.  It  is  up  to  the  public.  The  company  could 
stamp  right  on  there  that  the  check  must  be  used  at  a given 
time.  It  is  like  any  other  privilege.  You  know  how  it  is 


112 


BOSTON  ELEAWTKI)  RAILWAY. 


[Mar. 


used  at  times.  1 realize  that  no  matter  what  laws  you  make, 
it  is  almost  impossible  to  make  people  honest.  If  the  people 
would  use  the  transfers  in  the  same  good  faith  that  the  com- 
pany gives  them  to  them,  there  would  be  little  trouble.  I often 
wondered,  when  I was  a youngster  and  at  the  free  drinking 
places  I saw  the  heavy  chains  on  the  old  dippers,  chains  that 
were  heavier  than  the  dipper,  — I wondered  why  they  were 
l)ut  on  there,  and  then  somebody  told  me  that  it  was  to 
avoid  people  stealing  them.  We  have  tried  to  make  laws 
that  would  make  the  ])eople  honest.  We  have  tried  to  do  it 
in  this  Legislature,  and  the  further  we  go,  the  worse  they  get. 

]\Ir.  Ufford.  Mr.  Chairman  — 

President  Wells.  Mr.  IM'ord,  I gave  you  time  to  make 
your  statement  this  morning. 

]Mr.  Ufford.  1 only  wanted  to  answer  that  ([uestion.  He 
asked  how  I would  solve  his  question,  keeping  his  8-cent 
fare,  and  when  I have  the  o])portunity  to  present  my  state- 
ment 1 shall  show  him  just  how  it  can  be  done. 


Mr.  (ieorge  Cherry. 

]My  name  is  George  Cherry,  president  of  the  ]\it.  Hope 
Citizen’s  Association,  of  about  400  members. 

^Ir.  Chairman  and  gentlemen,  I am  not  going  to  talk  to 
you  about  stocks  above  par  or  any  other  thing  which  is  on 
the  surface,  when  we  have  not  had  an  o])portunity  to  in- 
vestigate the  matter. 

You  gentlemen  liere  are  ])ublic  officials,  men  that  are  paid 
for  it,  men  that  liave  experts  to  investigate,  and  you  are  the 
gentlemen  who  ought  to  know  what  relief  the  Boston  Ele- 
vated should  have,  and  not  us.  We  can  ex])ress  our  opinion. 
If  1 want  to  investigate  their  affairs  I don’t  think  1 am 
capable  of  doing  it.  Second,  I could  not  give  it  my  time 
because  1 have  got  to  make  jny  living. 

Now,  1 will  say  this  to  you.  In  my  o])inion  the  Boston 
Elevated  needs  relief,  and  1 believe  that  the  Boston  Elevated 
should  be  given  relief  by  you  ])eo])le  and  by  your  decision,  to 
the  be.st  of  your  ability,  in  the  interest  of  the  ])ublic  and  the 
interest  of  the  Elevated.  1 have  been  before  the  different 
commissions  for  the  last  20  years.  1 know  you  all  pretty 


1917.] 


HOUSE  — Xo.  1875. 


113 


much  personally,  and  I have  fought  the  Boston  Elevated  for 
what  the  people  want,  time  and  time  again,  and  until  we  get 
what  we  want.  And  I want  to  say  that  I am  not  taking  the 
part  of  the  Boston  Elevated. 

I have  had  a grievance  against  them  lots  of  times,  but 
when  I was  able  to  convince  them  that  the  public  needs 
something,  and  that  they  should  give  it  to  them,  they  stood 
convinced  and  gave  it  to  us. 

To-day,  Mr.  Chairman  and  gentlemen,  the  public  is  at 
fault  more  than  anybody  else.  Human  nature  the  world 
over  is  the  same.  We  don’t  want  to  walk  across  the  street 
if  we  can  get  a public  service  corporation  to  give  us  an  ele- 
vator or  a car  to  ride  across,  and  the  more  cars  we  have,  the 
more  trucks  we  have  on  the  street,  the  more  expense  and  the 
more  we  have  got  to  pay. 

Now,  gentlemen,  the  people  to-day  have  got  to  make  up 
their  mind  that  they  must  walk  more,  and  I wish  there  was  a 
law  — if  I was  in  the  Legislature  I think  I would  put  in  a 
bill  in  the  Legislature  to  compel  the  people  to  walk  certain 
distances  to  their  car.  I believe  it  would  do  them  good.  I 
believe  that  the  doctors  would  not  make  so  much  money  as 
they  are  making  to-day.  And  I tell  you  right  straight  now, 
gentlemen,  about  the  way  you  are  going  to  do  it,  I don’t 
know  anj'thing  about.  I never  bought  5 cents  worth  of  stock 
or  sold  — because  that  is  gambling.  But  if  I want  to  gamble 
I would  rather  take  five  or  six  of  you  gentlemen  in  a hotel 
and  play  poker  with  you,  because  then  T know  how  I lost  it. 

What  my  idea  is,  what  the  rank  and  file  of  the  people, 

1 believe  95  per  cent  in  the  city  of  Boston,  is  that  they  are 
opposed  to  raising  the  fares.  My  organization  will  oppose  it 
to  a man.  As  an  individual  I oppose  it,  but,  gentlemen,  not 
because  I know  that  that  is  the  best  solution.  Xo,  1 don’t. 
But  1 am  against  the  raise  in  fares.  I am  against  paying 
anything  any  more  than  1 can  he!]),  because  I am  human. 
But  1 believe  that  you  gentlemen  should  recognize  that  the 
Boston  Elevated  is  a home  cor})oration,  of  stockholders,  and 
they  are  all  men  that  own  stock  in  the  Uommoiiwealth  of 
Massachusetts.  I believe  that  you  should  give  them  relief, 
in  the  interest  of  the  people,  and  give  them  a relief  just  the 


114 


BOSTON  ELEVATED  BAILWAY. 


same  as  you  have,  some  of  you,  given  relief  to  the  New 
Haven  Company  after  they  have  robbed  the  people  of 
millions  of  dollars,  and  they  go  to  the  Legislature  and  say, 
“We  are  sorry;  forgive  us.  Give  us  legislation  and  give  us  a 
chance  to  do  it  over  again.”  That  is  what  the  New  Haven  did. 

Now,  I believe  this,  gentlemen:  Give  them  the  relief. 
Mr.  Macy,  president  of  the  United  Improvement  Associa- 
tion, of  which  I am  a delegate  ever  since  the  organization 
was  started,  — I am  proud  of  him,  the  way  he  explained  to 
you  what  the  United  Improvement  Association  stands  for. 
Most  of  his  report  here  to-day  was  a recommendation  which 
was  reported  by  a committee,  but  when  the  organization 
and  the  delegates  come  in  there,  there  might  be  something 
different  there,  when  we  come  to  ratify.  But  he  has  given 
you  a good  com])rehensive  argument  here,  as  far  as  his 
knowledge  goes,  and  as  far  as  we  could  investigate  it.  But 
he  could  not  go  far  enough,  because  he  don’t  have  money 
enough  to  do  it.  He  cannot  do  it.  He  did  the  best  he 

could.  It  is  for  you  people.  And  I am  sorry  for  you,  be- 
cause I don’t  care  which  way  you  decide  this  matter,  you 

will  be  criticized.  Therefore,  gentlemen,  give  a good  con- 

sideration to  the  company  and  to  the  public,  and  if  you  find 
there  is  any  doubt  whether  the  corporation  should  have 
it  or  not,  then  give  the  benefit  of  the  doubt  to  the  ])ublic. 

lion.  John  F.  Fitzgerald ^ K.x- Mayor  of  Boston. 

Mr.  Chairman,  I want  to  thank  the  chairman  of  the 
committee  for  the  privilege  of  saying  something  at  this  time. 

I was  rather  astonished  last  week,  in  reading  the  report 
of  the  hearing  here,  to  find  the  Mayor  giving  utterances  to 
sentiments  which  astonished  me,  and  1 could  not  let  this 
oj)portunity  go  by,  when  this  hearing  was  appointed,  of  en- 
tering my  remonstrance  to  the  views  which  he  has  exj)ressed 
as  the  iMayor  of  Boston.  1 was  IMayor  of  Boston  for  six 
years,  and  the  i)ublic  no  doubt  in  Boston  expect  that  I have 
some  views  on  the  s\d)ject. 

When  the  Mayor  proj)oscd  that  Boston  taxes  may  be  in- 
creased in  order  that  ])eoi)le  may  have  an  opportunity  to 
ride  from  Arlington,  b miles  out  of  Boston,  and  outside  of 


1917.] 


HOUSE  — No.  1875. 


115 


Boston,  out  on  the  other  side  of  the  city  as  far  as  Neponset, 
for  5 cents,  then  I object  to  it. 

When  the  Mayor  of  Boston  advocates  before  your  Com- 
mission, as  he  did  in  this  statement  of  last  week,  the  increase 
of  taxes  in  Boston,  that  people  in  the  outlying  sections  may 
ride  6 or  7 or  8 or  9 miles  north  of  Boston,  ^and  still  outside 
the  Boston  line,  I object  to  it. 

I was  astonished  that  there  was  no  more  comment  in  the 
paper  on  the  thing,  because  I don’t  think  Mr.  Cherry  and 
the  other  gentlemen  can  appreciate  what  his  Honor  has  said. 
I would  like  to  be  corrected  if  this  statement  is  not  correct, 
by  the  Commission.  He  said: 

On  one  hand,  the  traveling  public  will  oppose  increases  of  fare, 
and  on  the  other  hand  municipalities  will  oppose  temporary  reduction 
of  taxes. 

If  one  or  the  other  of  these  forms  of  relief  must  in  your  opinion  be 
applied,  then,  in  my  judgment,  it  would  be  better  for  the  community 
as  a whole  to  have  a temporary  reduction  made  in  the  company’s  taxes 
than  to  have  relief  come  through  the  medium  of  increased  fares.  I 
sincerely  hope  that  some  means  of  relief  may  be  found  which  does  not 
require  either  the  increase  of  fares  or  the  temporary  reduction  of  taxes. 

I am  inclined  to  believe,  therefore,  that  taking  the  community  as  a 
whole  less  hardship  would  be  caused  through  a temporary  reduction  of 
taxes  than  through  an  increase  of  fares,  and  for  this  reason  I prefer  a 
reduction  of  taxes  as  a choice  of  evils. 

This  brings  me  to  the  qualification  which  I spoke  of  in  connection 
with  the  situation  of  the  city  of  Boston  in  the  event  of  having  the 
company’s  taxes  reduced. 

Let  me  interpolate  once  more:  If  this  Commission  can  find  some 
means  of  providing  relief  other  than  reduction  of  taxes  or  increase  of 
fares,  that  would  be  a most  happy  solution  of  the  problem.  But  as  jmu 
may  possibly  find,  that  relief  must  come  either  through  increased  fares 
or  reduced  taxes;  and  as  I have  clearly  indicated  my  preference  as 
between  these  two  evils,  I must  insist  that  if  a temporary  reduction  of 
taxes  is  recommended,  it  be  accompanied  by  a recommendation  author- 
izing the  city  of  Boston  to  increase  its  tax  limit  sufficient  to  meet  the 
deficit  in  the  revenue  caused  by  the  reduction  in  the  taxes  paid  by  the 
company  to  the  city. 


I cannot  believe  that  His  Honor  ever  made  that  state- 
ment, but  it  is  in  print  and  I suppose  he  must  have  known 
or  realized  what  he  was  talking  about.  If  he  does,  it  seems 


116 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


to  me  an  extraordinary  position  for  the  Mayor  of  Boston  to 
take,  because  my  belief  is  that  the  Elevated  has  got  into  this 
trouble,  among  other  things,  because  of  its  trying  to  carry 
passengers  from  Arlington,  9 miles  north  of  Boston,  through 
$30,000,000  worth  of  tunnels  in  Boston,  to  a point  8 or  9 
miles  south  of  City  Hall  in  Boston,  for  5 cents;  and  yet  His 
Honor  seems  to  be  willing  those  people  should  enjoy  that 
privilege,  and  that  Boston  should  pay  increased  taxes  in 
order  that  they  may  do  it. 

I object  strenuously  to  that  point  of  view. 

Boston  is  obligated  for  about  $29,000,000,  and  I think  it 
approaches  $30,000,000  now,  on  this  account.  Boston  lends 
its  credit  to  the  Boston  Elevated,  and  it  is  the  only  city  that 
does  that,  outside  of  the  investment  in  Cambridge.  We  have 
the  worst  kind  of  service  in  Boston  that  I ever  saw  any- 
where. I have  complained  and  complained,  and  although  I 
was  Mayor  of  Boston,  my  word  went  up  against  the  wall. 

Why,  if  they  let  the  work  wait  the  way  they  are  doing, 
we  will  get  rapid  transit  in  my  district  about  1950.  I live 
in  Boston,  and  notwithstanding  Boston  has  loaned  about 
$30,000,000,  the  rapid  transit  is  to  the  north  of  Boston, 
Brookline,  Newton,  Watertown  and  Cambridge,  and  those 
communities  enjoy  it,  while  we  in  Dorchester  get  nothing. 
I tell  you,  Mr.  Chairman,  the  conditions  there  are  sickening. 

I pleaded  with  Governor  Eoss,  when  Mr.  Ellis  was  ap- 
pointed to  the  Transit  Commission,  to  appoint  a commis- 
sioner who  is  compelled  to  use  Dudley  Street.  I have  been 
in  all  parts  of  the  world,  and  I don’t  think  there  is  anything 
anywhere  that  approaches  Dudley  Street.  And  every  time  — 

Commissioner  Ellis.  You  appreciate,  Mr.  Mayor,  now 
that  you  have  raised  the  ])oint,  that  Dudley  Street  does  not 
come  within  the  j)r()vince  of  the  Transit  (\)inniission? 

Mr.  Fitzgehali).  I appreciate  that,  and  I appreciate  also 
that  there  ought  to  be  some  authority,  and  I figured  that  if 
Governor  Foss  a])])()inted  some  man  that  was  compelled  to 
use  Dudley  Street,  as  the  ])eo])le  are  coinjH'lled  to  use  it 
out  there,  there  would  be  some  means  found  to  control  it. 
Yourself  and  the  four  men  on  the  Commission  all  live  in  this 
section  of  Ih^ston.  I doubt  if  any  of  you  go  through  Dudley 


1917.] 


HOUSE  — No.  1875. 


117 


Street  twice  a year,  — you  don’t  unless  you  go  there  in  con- 
nection with  your  duties  on  the  Commission.  And  there  is 
no  member  of  the  other  Commission  [Public  Service  Com- 
mission] which  has  this  matter  in  hand  that  uses  Dudley 
Street,  and  I tell  you  that  Dudley  Street  is  a disgrace.  And 
I am  sorry  for  Boston  and  the  people  who  use  it.  I begged 
Governor  Foss  to  appoint  a man  wdio  would  be  compelled 
to  submit  to  those  conditions  which  threaten  the  morals  of 
the  women  ,and  girls  who  go  through  there,  and  he  would 
not  do  it,  and  not  a member  of  this  body  lives  anywhere 
near  there,  so  that  they  are  compelled  to  go  through  there 
at  all. 

That  is  a fine  situation  of  affairs.  As  I said  before,  the 
Elevated  spent  $30,000,000,  and  I can  count  the  times  when 
I can  get  a seat  — either  in  the  Elevated  as  I go  down  to 
Milk  Street  — and  I tried  it  at  quarter  past  nine  the  other 
night,  and  I got  on  a Norfolk  Street  car,  and  it  was  so 
insufferably  crowded  at  Grove  Hall  that  I got  out.  And 
then  I w^aited  for  a Milton  car,  and  when  that  came  along 
there  were  twelve  passengers  standing  in  that  car,  Mr. 
Superintendent  of  the  Road  [addressing  President  Brush]. 
And  I am  sick  of  the  situation  there.  When  I was  Mayor  I 
went  down  there  and  saw  the  superintendent  time  and  time 
again,  and  he  was  very  nice  in  words,  but  when  it  came  to 
reliefs,  we  got  nothing.  And  when  there  are  so  many 
things  which  the  Mayor  asks  that  the  Elevated  be  relieved 
upon,  and  that  the  city  shall  be  charged  increased  taxes  in 
order  that  the  people  way  out  of  Boston  may  ride  from 
Arlington  clear  through  the  city,  for  seventeen  miles,  I would 
like  to  see  him  confirm  it  in  some  statement,  because  I don’t 
believe  a man  with  the  responsibility  which  he  possesses  as 
Mayor  of  Boston  could  make  such  a statement  as  that. 

I want  to  say,  — I see  that  Mr.  IJfford  is  here,  before  the 
Commission,  and  I think  he  has  a very  comprehensive  idea 
of  the  conditions,  and  if  his  idea  had  been  carried  out  I 
don’t  think  we  would  have  the  conditions  we  have  now. 
Within  a quarter  of  a mile  of  my  house  there  is  the  Shaw- 
mut  Branch.  I don’t  think  there  are  half  a dozen  passcjigers 
who  travel  on  that  route  to  East  Milton,  and  1 tried  when 


118 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


I was  Mayor  to  secure  some  co-ordination  between  the  steam 
railroads  and  the  street  railway,  with  a view  to  obtaining 
such  relief  as  might  be  got  out  of  that  line  of  railway.  I 
think  a bill  was  passed  by  the  last  Legislature.  I think  the 
figures  would  show  that  that  road  does  not  pay.  We  are  in 
terrible  condition  out  there,  and  there  is  that  road  lying 
there  practically  through  the  heart  of  this  district,  and  it  is 
not  utilized  at  all,  practically.  I don.’t  know  who  is  respon- 
sible, but  I brought  the  matter  to  the  attention  of  the  proper 
authorities  every  year  when  I was  Mayor  of  the  city  of 
Boston. 

I will  tell  you  what  I think  ought  to  be  done.  I think  the 
Executive  Committee  of  the  Boston  Elevated  Railway  ought 
to  be  made  to  do  their  work.  You  ought  to  get  Mr.  Winsor 
and  Mr.  Prendergast  and  Mr.  Richards,  and  find  out  what 
they  do.  Find  out  how  much  authority  Mr.  Brush  has. 
Find  out  how  much  authority  Mr.  Snow  has.  And  just  insist 
upon  men  being  on  that  job  that  ought  to  be  there. 

I have  a friendship  for  all  three  of  them.  But  they  cannot 
do  the  work  that  they  are  trying  to  do  and  relieve  this  in- 
tolerable condition  which  exists,  and  if  I had  my  way  I would 
make  every  one  of  them  ride  on  the  Elevated  every  morning 
and  every  night.  I doubt  if  they  ever  ride  on  it.  Let  them 
go  through  Dudley  Street  one  or  two  nights,  and  they  will  be 
so  ashamed  of  their  work  that  they  will  resign  and  put  some- 
body else  on  that  job. 

When  General  Bancroft  was  president  it  was  the  same. 
]Mr.  Prendergast  is  about  as  approachable  as  a polar  bear  up 
in  the  Arctic  Ocean.  Mr.  Winsor  is  in  New  York  about  all 
the  time  and  about  one-seventeenth  of  a minute  is  about  all 
the  time  you  can  get  from  Mr.  Winsor.  ^Nlr.  Richards  is 
another  busy  man,  and  he  has  his  watch  in  his  hand  all  the 
time  you  talk  with  him,  and  he  says,  “ 1 have  not  got  a 
minute,  1 have  not  got  a minute.” 

^’ou  know,  ]\lr.  President,  what  would  hai>j)en  to  the 
Senate  if  you  as  ])residing  officer  gave  it  the  same  attention 
that  these  men  give  to  tlie  management  of  this  road.  And 
you  will  never  get  anywhere  until  you  put  these  men  on  the 
earpets  and  find  out  how  much  time  they  give  to  the  work,. 


1917.] 


HOUSE  — No.  1875. 


119 


how  much  stock  they  own,  and  what  they  are  willing  to  do 
in  case  you  are  willing  to  give  them  relief. 

I think  that  the  city  of  Boston  ought  to  have  a representa- 
tive on  the  Boston  Elevated  management.  And  I think 
Massachusetts  ought  to  have  a representative.  I think  the 
time  has  come  when  this  railroad  should  be  made  something 
more  than  a mere  banking  proposition,  managed  for  profits, 
and  that  is  the  way  they  are  managing  it.  Eighty  per  cent 
of  all  the  business  in  this  country  is  in  the  corporations  and 
is  on  the  exchange,  and  is  being  handled  from  the  bankers’ 
standpoint. 

The  situation  on  the  Boston  Elevated  is  disgraceful.  They 
cannot  blame  the  politicians  for  it.  It  is  the  financiers  who 
have  been  running  the  road  which  puts  them  into  this  con- 
dition. The  quicker  your  Cornmission  recognizes  that  situa- 
tion and  puts  them  on  the  carpet,  the  quicker  you  will  get 
relief. 

I don’t  know  how  it  can  be  done,  but  my  judgment  is  that 
one  director  in  the  Boston  Elevated  should  be  named  by  the 
city  of  Boston,  and  be  upon  that  directorate,  and  another 
should  be  the  representative  of  Massachusetts,  and  let  the 
people’s  representatives  find  out  how  things  go.  Then  if  it  is 
a 6-cent  fare,  give  them  a 6-cent  fare.  If  it  is  a 7-cent  fare, 
give  them  that. 

The  people  of  Boston  want  conditions  of  traffic  that  are 
honorable.  They  don’t  want  conditions  that  would  be  dis- 
graceful to  Darkest  Russia,  out  there  at  Dudley  Street. 
They  don’t  want  the  Boston  Elevated  robbed,  but  the  fare 
ought  to  be  reasonable.  These  men  in  the  Elevated  may  be 
honest  enough,  but  they  have  not  a proper  appreciation  of 
their  duty  to  the  public.  And  I think  it  is  the  duty  of  this 
Commission  to  put  them  right  on  the  carpet  and  find  out 
what  should  be  done.  When  people  who  manage  property 
have  not  got  time  to  come  up  here  and  discuss  measures  of 
relief,  they  ought  not  to  be  given  relief.  It  is  time  the 
people  should  step  right  in;  and  if  you  don’t  get  public 
ownership,  put  into  that  management  sufficient  and  able 
representatives  of  the  city  of  Boston. 

President  Wp:lls.  Are  there  any  questions  by  any  member 
of  the  Commission? 


120 


BOSTON  ELEVATED  RAILWAY. 


,r. 


Commissioner  Eastman.  Would  you  favor  entire  public 
ownership  and  management? 

Mr.  Fitzgerald.  Not  personally,  no;  but  unless  condi- 
tions change  soon,  yes.  They  could  not  be  any  worse. 

Commissioner  Eastman.  Why  do  you  oppose  it  now? 

Mr.  Fitzgerald.  I don’t  oppose  it.  But  I would  try  the 
other  thing  first.  ‘ I don’t  know  how  the  condition  of  the 
stock  market  may  be.  I cannot  answer  oft'hand.  1 think 
that  should  com.e  ultimately.  But  I don’t  think  it  will  come 
under  the  present  conditions  of  the  Legislature.  You  will 
never  get  it  through  this  Legislature,  and  I want  relief  before 
I am  dead  and  gone.  But  you  can  get  representation  if  you 
ask  for  it,  and  that  is  the  entering  wedge. 

Commissioner  Ellis.  Suppose  the  Commission  were  con- 
vinced that  the  Elevated  needed  some  sort  of  relief.  Would 
you  favor  that  relief  by  a raise  in  fare  or  an  attempt  to 
spread  it  among  the  different  communities  who  use  the 
system  ? 

Mr.  FiTi(GERALD.  1 would  spread  it  out  among  the  differ- 
ent communities.  Boston  and  the  several  suburbs.  Boston 
ought  not  to  be  taxed  to  give  Arlington  a 5-cent  fare.  It  is 
the  most  absurd  proposition  I ever  heard. 

Commissioner  Ellis.  Your  objection  is  not  to  the  method 
of  spreading  out  the  relief,  but  as  to  the  proportion  to  which 
communities  ought  to  contribute? 

INIr.  Fitzgerald.  Well,  I object  to  Boston  being  taxed  to 
pay  for  a 5-cent  fare  out  in  Arlington  and  outlying  territory 
that  ought  to  get  its  relief  through  their  own  treasury  and 
by  no  means  through  an  increased  tax  in  Boston.  I believe 
you  ought  not  to  give  any  relief  until  you  put  the  men  who 
manage  the  road  on  the  carpet  here  and  ask  them  what  they 
will  do  about  this  ])roi)osition.  And  I think  you  ought  to 
})ut  the  i)eople  in  j)ositions  of  resi)onsibility,  so  that  if  I .go 
down  to  see  them  I can  find  somebody  who  will  give  10 
minutes,  without  aj)ologiziug  for  the  time  that  you  take,  or 
without  an  insult  when  you  meet  them,  as  is  the  case  .with 
one  member  of  the  committee. 


1917.] 


HOUSP]  — No.  1875. 


121 


Daniel  W.  Casey,  Esq. 

I want  to  say,  speaking  for  the  people  of  South  Boston, 
that  in  the  final  event  that  this  Commission  comes  to  a 
determination  that  the  Boston  Elevated  is  in  need  of  finan- 
cial assistance,  that  they  exempt  South  Boston,  because  we 
believe  that  at  present  South  Boston  is  sufficiently  fertile 
for  the  Boston  Elevated  to  make  a fair  profit  because  of  its 
close  proximity  to  the  city,  and  because  of  the  character  of 
the  equipment,  which  is  wholly  below  standard.  I believe  in 
an  adequate  zone  system,  that  the  people  who  get  a short 
ride  shall  not  be  taxed  in  the  same  proportion  as  the  people 
who  get  an  hour  or  three  quarters  of  an  hour’s  ride. 

Hon.  Echvard  G.  Morris  of  South  Boston. 

I just  want  to  follow  along  as  the  representative  has 
said.  Our  district  is  so  near  Boston  that  I don’t  think  we 
ought  to  be  burdened  with  anything  more  than  a 5-cent 
fare.  From  City  Point  to  the  State  House  is  only  about  20 
minutes’  run.  From  some  sections  of  South  Boston  you  can 
walk  to  the  Post  Office  in  10  minutes,  and  5 cents  ought  to 
be  a sufficient  share  for  the  people  of  South  Boston. 

There  is  nothing  further  that  I can  say,  because  I feel 
that  my  people  ought  to  be  exempt  from  this  extra  charge. 

President  Wells.  Any  questions?  Does  anybody  else 
appear  here? 

Mr.  Francis  D.  Ilarrigan. 

My  name  is  Francis  D.  Harrigan  and  I am  president  of  the 
Meeting  House  Hill  Improvement  Association. 

At  a meeting  last  week  I was  asked  to  come  here  to-day 
and  oppose  the  increase  of  fare  and  reduction  of  transfer 
privilege,  and  we  feel  that  relief  can  be  given  by  either  the 
State  or  the  city  taking  over  the  Cambridge  subway  and  cur- 
tailing exj^enses  elsewhere.  And  as  the  discussion  has  been 
very  clear  to-day  by  our  president,  Mr.  Macy,  of  the  United 
Improvement  Association,  of  which  we  are  also  members,  I 
feel  that  I cannot  add  anything  to  that,  with  the  exception 
of  those  two  definite  things,  that  we  are  opposed  to  the 


122 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


raise  in  fare  and  the  abolition  of  transfer  privileges,  and  we 
favor  the  subway  being  taken  over  by  the  city  of  Cam- 
bridge or  the  State  of  Massachusetts. 

Mr.  Fitzgerald.  May  I say  a word?  I will  only  take  a 
moment. 

President  Wells.  If  there  is  no  one  else. 

Mr.  Tuck.  Just  a moment. 

President  Wells.  You  have  spoken  before.  If  there  is 
no  one  else  here  who  has  not  spoken  at  all,  I shall  give 
Mayor  Fitzgerald  the  opportunity.  Is  there  any  one  else 
who  has  not  spoken  who  desires  to  be  heard? 

[No  response.]  Now,  Mr.  Fitzgerald,  we  will  give  you  a 
minute. 


Further  Statement  of  lion.  John  F.  Fitzgerald. 

Mr.  Chairman,  I don’t  think  we  will  get  anywhere  in  this 
matter  unless  the  men  w^ho  are  charged  with  the  duty  of 
operating  that  road  are  willing  to  come  forward  and  tell  what 
they  will  do  and  answer  questions  by  the  Commission,  in 
order  that  the  inside  management  of  the  road  may  be 
brought  out.  They  don’t  have  a proper  appreciation  of 
their  responsibilities  to  the  public.  I know  that. 

They  are  living  in  an  atmosphere  entirely  apart  from  the 
patrons  of  the  road;  and  as  I said  before,  one  of  them  insults 
you,  if  you  go  to  see  him,  even  when  a man  who  has  been 
mayor  of  Boston  approaches  him  on  the  matter.  And  their 
arrogance  is  shown  in  granting  j\Ir.  Bancroft  S25,000,  and  I 
really  admire  their  nerve  in  doing  that,  and  at  the  same 
time  coming  up  here  asking  for  relief.  I don’t  know  whether 
it  is  nerve  or  arrogance.  They  ought  to  be  put  on  the  car- 
pet to  show  why  he  should  have  S25,000  a year,  which  is 
three  times  as  much  as  the  highest  officials  of  cities  and 
States  get.  And  they  ])ut  him  on  the  pay  roll  at  $25,000 
pension  a year,  and  I think  the  public  are  stunned  and 
shocked  that  the  committee  should  have  the  nerve  to  do 
that  thing. 

President  Wells.  Any  one  else? 


1917.] 


HOUSE  — Xo.  1875. 


123 


Mr.  Whitfield  L.  Tuck. 

At  the  last  meeting  I did  not  make  reply  to  what  was  said 
because,  I did  not  have  the  newspaper  article  from  which  I 
had  spoken.  Two  members  of  this  Commission,  one  a mem- 
ber of  the  Public  Service  Commission  and  one  of  the 
Boston  Transit  Commission,  questioned  the  truth  of  the 
statement  I made.  x\nd  I want  to  state  right  here  that  my 
authority  was  the  morning  ^‘Post”  of  X^ovember  8,  where 
it  was  stated  that  Mr.  Gerald  Walsh  had  said : 

Wlien  I got  to  vdthin  20  feet  of  the  gates  I first  saw  that  they  were 
closed.  The  car  I was  running  is  an  old-fashioned  hand  brake  car. 
I twisted  the  brake  as  hard  as  I could,  but  to  my  horror  found  that  it 
would  not  hold. 

That  is  what  I said  and  what  I had  in  mind.  As  long  as 
Judge  Russell  asked  about  this,  I think  it  is  well  for  you  to 
have  that.  But  I find  myself  in  good  company  in  criticizing 
the  Elevated  Railway,  because  only  recently  Judge  Irwin 
published  a criticism  of  the  manner  in  which  that  company 
conducts  its  business. 

Since  I was  here  I have  been  elected  a delegate  from  the 
Winchester  Grange,  the  grange  which  has  the  membership  of 
His  Excellency  the  Governor,  and  that  grange  last  Tuesday 
night  by  unanimous  vote  protested  against  the  granting  of 
the  6-cent  fare  on  the  Elevated. 

Further  Statement  of  Mr.  John  E.  Macy. 

Tlie  suggestion  made  by  several  gentlemen,  and  lastly  by 
the  former  Mayor  of  Boston,  in  regard  to  the  question  of 
allowing  passengers  to  go  from  one  side  of  the  city  to  the 
other,  — that  is  a situation  which  1 omitted  to  speak  of,  and 
to  make  any  suggestion  about  in  behalf  of  our  association. 

I simply  want  to  say  this,  that  we  should  oppose  any  at- 
tempt to  charge  a double  fare  or  an  extra  fare  for  passing 
from  one  side  of  the  city  to  the  other.  It  has  impressed  me, 
in  thinking  the  matter  over,  how  this  system  of  transporta- 
tion has  bound  all  parts  of  the  metropolitan  district  together 


124 


BOSTON  ELPIVATEI)  BAILWAY. 


[Mar. 


under  a virtual  contract  which  is  the  basis  of  so  much  of 
our  industrial  activity  at  the  present  time  that  it  is  not  a 
just  thing  to  change  it  at  all.  For  example,  how  many  wage 
earners  at  the  present  time  travel  to  Cambridge  from  East 
Boston  for  work?  How  many  go  every  day  back  and  forth 
from  Dorchester  to  Charlestown  for  their  work?  How  many 
from  Chelsea  over  to  Dorchester  or  South  Boston  and  back? 

I have  friends  who  live  in  Dorchester.  1 know  many 
tenants  and  owners  of  small  homes  in  Dorchester  who  go  over 
to  East  Boston  every  day  and  back  at  night.  It  is  not  a 
proper  thing,  I submit,  to  change  that  system.  It  is  based 
upon  a virtual  contract. 

Think  of  the  magnificent  Institute  of  Technology  that  has 
grown  up  across  the  river  in  Cambridge,  and  the  other  great 
institutions  that  are  situated  in  Cambridge,  located  there 
upon  the  assumption  that  they  will  always  be  accessible  from 
all  parts  of  the  metropolitan  district  for  a 5-cent  fare. 

The  matters  are  too  much  bound  together  in  the  metropol- 
itan district  to  allow  such  an  arbitrary  line  to  be  drawn  as 
that,  in  traveling  from  one  part  of  the  district  to  another. 

President  Wells.  Is  there  anybody  else  who  desires  to  be 
heard  this  morning? 


Mr.  F.  JJ\  Merrick. 

My  name  is  ^Merrick,  of  the  United  Improvement  Associa- 
tion. 

There  is  one  thought  which  governed  the  committee  in 
their  consideration  of  this  problem  that  has  not  been  brought 
clearly  out  here.  This  is  not  a question  of  the  accommoda- 
tion only  of  those  who  ride  in  the  cars.  The  virile  life  of  this 
community  depends  upon  the  ready  access  of  the  people  who 
live  in  the  suburbs  to  the  town.  Those  who  do  business  in 
the  city  are  more  interested,  if  ])ossible,  than  those  who  ride 
in  and  out.  Those  business  men  at  the  corner  of  Washington 
and  Summer  Street  and  Winter  Street  — are  they  not  more 
interested  in  the  transit  ])roblem  than  the  men  who  pay  a 
nickel  to  ride  in  and  out?  They  certainly  are.  And  we  want 
to  warn  you  against  any  attem])t  to  balance  the  interest  of 
the  metro])()litan  district,  one  part  against  another.  It  is 


1917.] 


HOUSE  — Xo.  1875. 


125 


all  one  problem,  and  the  life  of  the  community  depends  upon 
the  proper  and  efficient  service  of  this  system. 

President  Wells.  Is  there  anybody  else  to  appear  at  this 
time?  [No  response.] 

Now,  Mr.  Ufford,  I understood  that  the  Lieutenant-Gov- 
ernor was  to  appoint  a sub-committee  to  take  up  your 
figures? 

Mr.  Ufford.  That  would  be  agreeable  to  me.  It  would 
be  more  agreeable  to  digest  these  figures  because  I need  some 
one  who  has  access  to  the  Transit  Commission  books  and 
also  the  Public  Service  Commission  books,  to  see  if  these 
figures  which  I give  are  safe  to  base  this  proposition  which 
the  Mayor  so  kindly  referred  to,  and  which  is  so  important 
to  the  city,  namely,  the  co-relation  of  the  steam  and  electric 
railways. 

President  Wells.  The  Lieutenant-Governor  has  been 
busy  in  the  Council  meeting  this  forenoon,  and  I assume  he 
would  do  that.  It  is  too  late  to  go  into  that,  and  if  he  is 
going  to  do  that  I think  that  will  be  a better  solution. 

IVIr.  Ufford.  And  then  by  and  by  after  it  is  boiled  down 
can  it  be  submitted  in  typewritten  form  to  the  Commission, 
at  their  expense  and  not  at  mine?  Because  I have  paid  all 
these  bills  for  the  last  half  a dozen  years,  advertising  and 
everything  out  of  my  own  pocket.  And  this  is  a labor  of 
love,  hoping  to  leave  when  I pass  away  a monument  to  the 
everlasting  good  of  that  section  of  Dorchester,  and  to  pre- 
serve the  5-cent  fare.  I know  how  to  raise  83,000, 000  with- 
out raising  the  fare  above  5 cents  into  the  city  and  out. 

President  Wells.  Mr.  Lffi'ord,  1 think  after  the  sub- 
committee has  gone  over  your  plans  and,  as  you  said,  boiled 
them  down,  there  will  be  no  difficulty  in  the  (k)mmissi()n 
having  every  member  supplied  with  a copy  of  your  state- 
ment, at  the  expense  of  the  Commission. 

Mr.  Ufford.  I would  like  also  at  the  same  time  to  have 
this  maj),  of  which  I have  lost  the  original,  coj)ie(l,  with  the 
detail  which  is  in  there,  for  1 have  a champion  pay-as-you- 
leave  systcjn.  And  the  gentleman  [Senator  Beck]  who  wants 
the  8-cent  fare  can  have  it  on  the  basis  of  a zone  and  a half, 
and  all  these  details,  which  are  cjuite  intricate. 


12G 


BOSTON  p:lp:vated  railway. 


[Mar. 


President  Wells.  All  those  details  can  be  taken  up  by 
the  sub-committee. 

Mr.  Ufford.  Can  I have  the  committee  meet  early  this 
week,  because  I fear  I shall  go  to  Toronto  to  stay  indefinitely. 

President.  Wells.  Is  there  any  one  else  who  wishes  to  be 
heard? 

Mr.  Snow.  Will  you  hear  me  for  a moment? 

President  Wells.  Certainly. 


Statement  of  Frederic  E.  Snow. 

In  regard  to  this  suggestion  for  a reduction  of  taxes,  I 
take  it  that  it  is  clear  to  the  Commission  that  there  was  no 
suggestion  that  the  city  of  Boston  should  bear  the  entire 
reduction.  Ex-]\Iayor  Fitzgerald,  I think,  gave  the  impression 
that  Boston  was  to  bear  the  entire  expense,  and  that  the 
outlying  towns  like  x\rlington,  Belmont  and  Brookline  were 
not  to  pay  any  part  of  it. 

The  suggestion  made  in  our  brief  was  that  that  reduction 
be  borne  proportionately  by  all  the  cities  and  towns  affected. 
I think  his  statement  did  not  give  a correct  impression  of 
what  it  was. 

Commissioner  Eastman.  In  proportion  to  what? 

Mr.  Snow.  In  proportion  to  the  mileage  operated.  Or  it 
might  be  fairer,  if  it  could  be  ascertained,  in  proportion  to  the 
amount  of  patronage. 

Commissioner  Stone.  I think  his  suggestion  was  that  if 
this  Commission  found  such  a thing  was  necessary,  the  city 
of  Boston  should  have  the  right  to  raise  whatever  additional 
amount  was  needed  to  meet  the  share  of  the  city  of  Boston. 

Mr.  Snow.  That  is  the  way  I understood  it. 

President  Wells.  Is  there  any  one  else  in  the  room  who 
desires  to  be  lieard  at  this  time?  [No  response.)  If  not, 
the  hearing  is  closed,  with  the  understanding  that  there  will 
be  another  hearing  at  10.80  next  Tuesday  morning. 

At  that  time  I understand  the  Mayor  of  Cambridge  and 
tlie  Real  Estate  Board  desire  to  be  heard.  We  would  also 
like,  if  there  are  any  other  organizations  that  desire  to  be 


1917.] 


HOUSE  — No.  1875. 


127 


heard  at  all,  that  they  would  come  in  at  that  time.  That  is 
one  week  from  to-morrow,  at  10.30.  The  hearing  is  closed 
and  the  Commission  will  go  into  executive  session  for  a 
moment. 

Public  hearing  adjourned,  to  be  resumed  at  10.30  a.m.,  on 
Tuesday,  November  28,  1916. 


128 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


SIXTH  DAY. 

Hearing  held  at  Room  362,  State  House,  Boston,  Mass., 
at  10.30  A.M.,  on  November  28,  1916. 

Present.  — All  the  members  of  the  Commission,  viz.,  the 
Lieutenant-Governor,  President  Wells,  Speaker  Cox,  Senators 
Bates  and  Eldridge,  Representatives  Jewett,  Newh’all  and 
Donovan,  Commissioners  Macleod,  Meaney,  Stone,  East- 
man and  Russell  [of  the  Public  Service  Commission]  and 
Commissioners  Swain,  Allen,  Ellis,  Quincy  and  Noyes  [of 
the  Boston  Transit  Commission]. 

Absent.  — Representative  Lawler. 

Appearances.  — For  the  Boston  Elevated  Railway  Com- 
pany: Matthew  C.  Brush,  Esq.,  president,  Frederic  E. 
Snow,  Esq.  [Gaston,  Snow  & Saltonstall],  counsel.  For  the 
city  of  Cambridge,  Hon.  Wendell  D.  Rockwood,  Mayor. 
For  the  city  of  Boston,  George  A.  Flynn,  Esq.,  assistant 
corporation  counsel.  For  the  Cambridge  Board  of  Trade, 
Gilbert  A.  x\.  Pevey,  Esq.,  Robert  Walcott,  Esq.,  Edward  F. 
]\IcClennen,  Esq.  For  the  Boston  Real  Estate  Exchange, 
Francis  R.  Bangs,  Esq.  For  the  State  Board  of  Trade,  ]\Ir. 
xMbert  F.  Haskel.  For  the  city  of  Chelsea,  Senator  John  E. 
Beck.  For  the  town  of  Revere,  x\ndrew  A.  Casassa,  Esq. 

Lieutenant-Governor  Coolidge  [])residing].  The  hearing 
will  come  to  order.  Did  you  wish  to  speak.  Senator  Wash- 
burn? 


Senator  llobert  M . Washburn. 

1 should  like  to  be  heard  for  about  five  minutes. 

The  Lieutenant-Governor.  All  right. 

Senator  Washburn.  Mr.  ('hairman  and  gentlemen  of 
the  Commission,  being  a somewhat  free  S])eaker,  j)()ssibly 
even  garrulous,  to  safeguard  the  rights  of  the  committee  1 
shall  confine  myself  to  the  manuscri])t,  which  will  be  brief, 


1917.] 


HOUSE  — Xo.  1875. 


129 


in  accordance  with,  sir,  your  splendid  inaugural  of  January, 
1914. 

I am  venturing,  through  an  eight-year  experience  in  the 
House,  during  the  whole  of  which  time  I was  upon  a trans- 
portation committee,  to  express  my  opinion  upon  the  affairs 
of  the  Elevated  before  this  Special  Commission.  Though 
not  a specialist,  I feel  as  free  to  express  myself  upon  the 
management  of  the  Elevated  as  the  Public  Service  Commis- 
sion has  expressed  itself  upon  the  management  of  the  Bay 
State  Street  Railway  Company. 

The  first  thing  for  this  Commission  to  do  is  to  audit  and 
cut  down  the  expense  account  of  the  Elevated.  In  my 
opinion,  this  shows  unreasonable  extravagance.  If  this  does 
not  bring  relief,  then,  and  then  only,  should  this  investiga- 
tion be  continued  for  remedy. 

As  a member  of  the  House,  I favored  the  increase  of  the 
wages  of  conductors  and  motormen,  if  only  for  the  logical 
reason  that  the  Elevated  should  appraise  as  generously  the 
services  of  him  who  rings  in  a fare  as  of  him  who  directs  the 
policy  of  the  company  from  a roll-top  desk.  There  has  been 
too  little  thrift  directed  towards  the  top  of  the  ladder,  and 
too  much  towards  the  bottom. 

Its  salary  list  for  officers  and  its  legal  payments  for  law 
are  indefensible.  A $35,000  salary  for  a president,  and 
$25,000  for  a president  emeritus,  is  too  much  pay  for  the 
work,  particularly  in  the  present  financial  condition  of  the 
company;  and  if  these  officials  feel  that  their  time  is  worth 
this  money,  then  their  understudies  should  take  up  their 
work.  In  my  opinion,  one  operating  head,  at  say  $15,000, 
should  do  their  work,  particularly  where  a supervisory  Board, 
the  Public  Service  Commission,  can  be  filled  at  $8,000  a seat. 
Clearly,  something  is  wrong,  either  the  pay  of  the  one  or  the 
other. 

Its  payment  to  counsel,  either  for  present  treatment  in 
the  courts,  or  for  absent  treatment  in  the  Legislature,  in  the 
latter  a notable  payment  of  $25,000,  is  a splendid  illustra- 
tion of  the  proposition  that  the  successful  practice  of  law  is 
too  often  legalized  robbery.  Its  array  of  counsel  has  too 
much  established  its  professional  position  by  the  fiction  of 


130 


BOSTON  ELPIVATED  RAILWAY. 


[Mar. 


fees,  than  by  substantial  return,  and  the  company  has  paid 
too  much  for  knee  action  and  too  little  for  value  received. 
It  should  have  one  directing  legal  head,  at  a reasonable 
annual  salary,  equivalent  to  that  received,  say,  by  the  cor- 
poration counsel  of  the  city  of  Boston,  say  $10,000,  he  to  buy 
what  auxiliary  talent  he  needs  for  perhaps  $600  a year,  out  of 
the  graduating  class  of  the  Harvard  Law  School,  in  which 
way  most  of  the  top-notch  Boston  law  offices  are  filled. 

Incidentally,  as  an  evidence  of  versatility,  and  to  further 
qualify  as  an  expert  on  these  matters,  allow  me  to  add  that 
I am  a lawyer,  or  perhaps  was,  if  ever,  and  to  further  observe 
that  the  law  department  of  the  Elevated  has  become  too 
much  of  a training  school  for  those  who  W’ere  tenderly  nur- 
tured in  early  years  in  wicker  perambulators  near  what  is 
now  the  Esplanade,  after  the  manner  of  the  development  of 
the  leader  of  the  Boston  Bar  by  the  Old  Colony  Railroad, 
which  department  has  become  too  much  a depository,  or 
sanctuary,  for  those  who  flourish  on  hereditary  momentum, 
and  where  the  name  of  Holworthy  takes  precedence  over 
Hooligan. 

To  reiterate,  the  mass  of  the  people  resent,  either  by 
increased  fares  or  reduced  taxation,  anything  like  an  indorse- 
ment of  this  kind  of  administration,  and  will  reasonably  try 
to  hang  hold  of  their  money  until  two  propositions  are  es- 
tablished: first,  that  present  conditions  are  eliminated,  and 
second,  that  this  will  not  insure  the  investors  a savings  bank 
return  on  a fair  valuation  of  the  ])roperty,  to  which  they  are 
entitled,  and  in  which  they  shoidd  be  protected. 

lion.  Wendell  1).  RocJcivood,  Mayor  of  Cambridge. 

Mr.  Chairman  and  gentlemen  of  the  Commission,  there  is 
no  public-service  corporation  that  contributes  so  directly  to 
the  convenience  and  comfort  of  the  public  in  a large  ])ortion 
of  the  metro])olitan  district  as  the  lh)ston  Elevated  Railway 
(’om])any.  This  system  of  transit  under  a single  manage- 
ment has  brouglit  to  all  ])arts  of  the  community  the  advan- 
tages of  subway  and  elevated  construction  and  tlie  convenience 
. of  inqu’oved  methods  and  modern  eciuipment.  Tlie  Elevated 
lias  not  been  disinclined  to  keej)  jiace  with  the  development 


1917.] 


HOUSE  — No.  1875. 


131 


of  the  territory  served,  and  has  met  the  call  for  better  ser- 
vice and  co-operated  with  the  Legislature  in  carrying  out 
the  mandates  of  that  body. 

Every  one  that  has  a sufficient  sense  of  fairness  is  willing 
to  concede  that  the  Elevated  has  built  up  a system  to  which 
the  community  can  point  with  pride  as  the  best,  mechani- 
cally and  physically,  in  the  country,  and  a service  that,  I 
believe,  is  unequaled  in  any  city.  The  Elevated  now  comes 
forward  and  says  that  a crisis  in  its  affairs  has  been  reached; 
that  further  progress  must  be  checked  unless  provisions  are 
made  for  its  financial  relief;  that  the  five-cent  fare  will  no 
longer  provide  for  maintenance,  extension  of  its  service, 
depreciation  and  dividends  for  its  stockholders.  When  ills 
befall  public  service  corporations  it  is  pretty  well  understood 
that  the  people  pay  the  cost  of  professional  attendance,  and 
provide  sustenance  for  the  patient  during  the  period  of  illness. 

Corporations  at  such  times  often  try  to  make  the  public 
believe  that  the  disarrangement  is  the  public’s  and  not  theirs, 
and  insist  on  administering  the  sugar-coated  pill  which  they 
have  provided  to  carry  out  the  delusion.  The  Elevated  is 
not  adopting  this  practice.  They  frankly  admit  that  they 
have  been  going  at  such  a pace  as  to  be  unable  to  properly 
assimilate  into  its  system  things  that  they  have  been  induced 
to  take  over.  Their  suffering  is  more  acute  than  chronic. 
Its  ailment  is  not  a deep-seated  or  organic  disease.  Like  a 
hopeful  patient  the  Elevated  has  the  rallying  powers  and  a 
reserve  strength  which  it  must  use  to  bring  about  its  own 
recovery.  A proper  scrutiny  into  its  internal  disorder  will  be 
helpful  in  administering  the  kind  of  relief  which  is  necessary 
for  recovery. 

The  knowledge  thus  obtained  should  be  valuable  in  pre- 
venting a recurrence  of  the  disease.  I have  sought  for  an 
expression  of  public  opinion  in  Cambridge  on  the  matter 
presented  to  your  Board  by  the  Boston  Elevated. 

I have  been  constantly  asked,  “How  do  we  know  that  the 
Elevated  needs  relief?”  It  is  superfluous  to  suggest  to  this 
Board  that  the  most  rigid  and  careful  examination  should  be 
made  into  the  affairs  and  conduct  of  this  company  in  order 
to  determine  that  it  is  entitled  to  relief  by  legislative  action. 


132 


BOSTON  ELEVATED  RAILWAY. 


r. 


and  at  the  expense  of  the  public.  I do  not  believe  in  spend- 
ing time  in  the  consideration  of  the  past  history  of  this  road 
except  in  so  far  as  it  is  presently  conducting  its  affairs  in  a 
manner  that  the  past  has  shown  to  be  inexpedient  or  ill- 
advised. 

If  it  is  now  in  a condition  where  public  assistance  is 
justified,  the  public  of  course  will  demand  that  it  conduct 
its  affairs  and  do  its  part  toward  remedying  its  troubles  in 
the  most  efficient  way,  and  not  be  guilty  of  a repetition  of 
any  past  experience  that  proved  detrimental  to  its  interests, 
and  therefore  to  those  of  the  public. 

Before  this  Commission  determines  that  this  company  is 
entitled  to  relief  in  any  of  the  ways  suggested  by  it,  or 
otherwise,  at  the  public  expense,  it  should  be  satisfied  to 
what  extent  the  road  itself  may  relieve  its  troubles  by  dis- 
posing of  and  turning  into  cash  property  that  it  owns,  and 
of  wTich  it  is  now  making  no  use.  This  company  has  real 
estate  which  formerly  was  used  for  stables,  or  car  barns,  or 
transfer  stations  in  and  about  Boston  that  could  be  sold  and 
turned  into  cash.  In  Cambridge  alone  there  are  a number 
of  such  pieces  of  real  estate,  many  of  which  are  valuable  and 
are  now  apparently  of  little  or  no  use  to  the  operation  of 
this  road.  To  carry  this  property  is  an  annual  expense  for 
which  there  seems  to  be  little  justification. 

If  this  Commission  should  find  that  the  company  is  en- 
titled to  relief  and  consider  the  suggestions  made  by  the 
company,  I am  of  the  opinion  that  its  first  five  suggestions 
are  of  little  practical  value  for  the  purpose  for  which  they 
are  offered.  There  are  two  aspects  to  this  situation: 
First,  the  service  rendered  by  this  road  to  the  public. 
Second,  the  duty  of  the  public  to  further  contribute  to  the 
revenue  of  the  road. 

The  first  five  suggestions  for  relief  above  referred  to  all 
tend  to  impair  or  shorten  the  service  that  the  public  is  now 
receiving  from  the  company,  and  are  not  entitled  to  the 
advocacy  of  any  one  interested  in  the  improvement  and 
progress  of  the  metro])olitan  district.  i\Iost  of  them  add  no 
substantial  increase  to  the  revenues  of  the  company  and 
would  go  only  a short  way  toward  bringing  about  the  relief 


1917.] 


HOUSE  — No.  1875. 


133 


desired.  The  increase  in  the  rate  of  fare  is  one  that  would 
meet  with  constant  irritation,  inconvenience,  and  be  an 
over-charge  on  the  traveling  public  that  I most  strenuously 
object  to.  The  adoption  of  the  so-called  zone  system  of 
fares  is  applying  to  our  metropolitan  district  the  system 
that  is  so  objectionable  in  the  less  settled  parts  of  our  State 
where  the  conductor  returns  frequently  for  an  additional  fare. 

The  charge  for  transfers  is  another  form  of  increase  in  the 
rate  of  fare,  and  is  as  objectional  as  the  penny  formerly 
charged  for  admission  to  the  East  Boston  tunnel,  and  would 
meet  with  the  same  opposition.  Anything  that  smacks  of 
the  toll  bridge  age  has  gone  forever.  The  establishment  of 
enclosed  areas  would  not  materially  increase  the  revenue  of 
the  company,  and  is  therefore  not  a remedy  for  relief.  Its 
adoption  would  simply  mean  that  the  Boston  merchants 
would  get  the  people  from  the  suburbs  without  their  having 
the  opportunity  of  making  purchases  by  the  way. 

The  continuance  or  the  elimination  of  the  8-cent  check  is 
of  little  interest  to  the  majority  of  the  people  of  Cambridge. 

I am  opposed  to  the  temporarily  or  otherwise  charging  off 
depreciation  against  premiums  paid  in  on  stocks  and  bonds. 
The  present  law  forbidding  this  is  a wise  provision,  and  to 
break  down  the  barrier  in  this  instance  is  a step  in  the 
wrong  direction,  and  should  not  be  encouraged.  If  the  Com- 
mission should  determine  that  the  purpose  for  which  the 
8500,000  deposited  with  the  State  has  been  substantially 
met  and  complied  with,  and  that  there  is  no  longer  any  real 
need  that  this  money  should  remain  on  deposit,  then  in 
mere  fairness  to  this  company,  it  should  be  returned. 

The  subway  question  remains  for  consideration.  The  dis- 
position of  the  Cambridge  subway  is  of  vital  importance  to 
Cambridge. 

If  this  Commission  should  determine  that  the  company  is 
entitled  to  relief,  I am  in  favor  of  the  public  ownership  of 
the  Cambridge  subway,  either  by  the  State  or  by  the  city 
of  Cambridge.  Either  ,the  city  or  the  State  could  finance 
this  Cambridge  subway  on  a much  lower  rate  of  interest 
than  the  Elevated.  I am  informed  that  the  89,()()(),()()0  loan 
for  the  purpose  of  the  purchase  of  the  Cambridge  su})way  by 


134 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


the  city  of  Cambridge  would  not  impair  its  borrowing  ca- 
pacity or  its  credit.  Of  course,  no  such  loan  would  in  any 
way  affect  the  credit  of  the  State.  There  are  advantages 
in  the  State  purchasing  the  subway  over  that  of  the  city 
doing  so. 

The  State  perhaps  could  borrow  its  money  at  a somewhat 
lower  rate  than  could  the  city  of  Cambridge,  although  this 
is  not  at  all  certain.  Cambridge  could  likely  finance  this 
loan,  including  a syndicate  fee,  for  a rate  of  3.85  per  cent. 
In  order  that  the  rental  of  the  subway  should  be  sufficient 
to  pay  the  interest  on  the  loan  and  to  retire  the  bonds  at 
maturity,  a rental  charge  equal  to  4f  per  cent  to  5 per  cent 
would  be  necessary.  The  State  might  be  able  to  finance 
this  matter  at  a rental  charge  of  4^  per  cent  and  the  com- 
pany thereby  benefit  by  a lower  rate.  It  must  be  remem- 
bered, however,  that  before  the  period  of  such  a loan  would 
have  expired  that  other  subways  might  be  required  and  built 
in  Cambridge,  and  that  before  the  expiration  of  the  loan 
period,  of  the  original  89,000,000,  other  investments  of  like 
amounts  would  be  demanded. 

The  legislative  act  authorizing  the  building  of  the  present 
Cambridge  subway  empowered  the  company  to  build  further 
subways  in  the  city  of  Cambridge.  The  extent  to  which 
increased  capital  would  be  required  for  further  subways  is  a 
matter  that  would  be  more  serious  to  the  city  of  Cambridge 
than  it  would  be  to  the  State.  The  State  might  well  be 
able  to  provide  for  all  such  that  the  future  may  demand, 
while  the  city  might  reach  its  limit  in  providing  money  for 
this  purpose,  before  the  demands  of  the  public  for  more 
subways  had  been  satisfied. 

Under  the  present  Cambridge  subway  act  the  city  of 
Cambridge  has  the  right  to  purchase  this  subway  under  cer- 
tain conditions.  The  city  of  Cambridge  most  assuredly  does 
not  want  to  waive  its  rights  in  this  regard.  It  desires  to  be 
considered  in  the  disposition  of  this  subway.  I believe  that 
if  this  Board  finds  that  the  Elevated  road  is  entitled  to 
relief  and  if  this  Commission  determines  that  the  Cambridge 
subway  should  be  ])urchased  from  the  Boston  Elevated  Rail- 
way Company,! that^the  terms  of  the  purchase,  including  the 


1917.] 


HOUSE  — No.  18'75. 


135 


price  to  be  paid  and  the  rate  of  interest  to  be  charged  on  a 
subsequent  lease,  should  be  fixed  by  this  Commission  and 
that  Cambridge  should  be  given  the  first  opportunity  to 
purchase  this  subway  upon  such  terms;  and  that  in  the 
event  of  the  city  failing  to  do  so  that  the  State  might  then 
make  such  purchase,  and  that  subsequently  the  city  of 
Cambridge  might  continue  to  have  the  right  to  purchase 
back  from  the  State  upon  the  same  terms  and  conditions 
that  the  State  purchased  from  the  road,  plus  such  interest 
charges  a^  this  Commission  might  determine. 

If  this  Commission  should  find  that  this  company  is 
entitled  to  relief  and  that  the  purchase  of  this  subway  should 
be  made  by  the  State,  this  Commission  should  recommend  a 
provision  that  would  not  reduce  the  revenue  that  the  city  of 
Cambridge  now  receives,  because  of  the  taxable  property  of 
the  Boston  Elevated  Railway  Company  now  situated  in 
Cambridge,  and  which  without  such  provision  would  become 
exempt  from  taxation  by  a State  purchase. 

In  a city  like  Cambridge,  where  more  than  one-fourth  of 
its  entire  valuation  is  now  exempt  from  taxation,  it  would 
not  be  just  that  further  additions  be  made  to  this  exempted 
list,  without  accompanying  reimbursements.  There  is  ample 
precedent  for  this  suggestion.  In  a number  of  recent  legisla- 
tive acts  where  State  or  county  took  further  property  for 
public  use,  it  was  provided  that  the  city  or  town  in  which  it 
was  located  should  be  given  a sum  of  money  equal  to  the 
amount  of  tax  that  it  would  receive  if  the  property  had 
not  become  exempt  from  taxation. 

This  year  Cambridge  will  receive  approximately  $15,000 
from  the  property  of  the  Elevated  which  would  become 
exempt  if  the  State  should  purchase  the  Cambridge  subway. 
If  the  purchase  price  should  be  reinvested  by  the  Elevated, 
it  is  possible  that  Cambridge  would  receive  back  some  part 
of  this  money  from  its  share  in  the  increased  franchise  tax 
that  would  necessarily  follow.  This,  however,  is  problem- 
atical. 

If  the  Commission  should  find  that  the  purchase  by  the 
State  of  the  Cambridge  subway  is  advisable,  I would 
suggest  that  for  the  sake  of  uniformity  that  the  State  also 


136 


BOSTON  ELE\^ATEL)  BAILWAY. 


[]\Iar. 

purchase  the  Boston  subways.  There  seems  to  me  no  good 
reason  why  the  State  should  own  the  Cambridge  subway  and 
the  city  of  Boston  should  own  its  subways.  A supervision 
of  all  subways  by  a State  board  with  larger  powers  than 
any  public  commission  now  has,  especially  with  authority 
to  be  represented  or  consulted  on  internal  and  economic 
matters  relating  to  the  management  of  the  road,  if  public 
financial  relief  is  to  be  given  it,  should  be  recommended  by 
this  Commission. 

If  this  Commission  should  determine  that  the  Elevated  is 
entitled  to  relief  and  if  it  should  recommend  the  purchase 
of  the  Cambridge  subway  by  the  city  or  State  and  that  this 
relief  was  not  sufficient  for  the  continuing  needs  of  the 
company,  and  further  relief  of  a more  permanent  nature 
should  be  extended  to  them  by  the  public,  I am  then  in  favor  of 
a reimbursement  for  subway  rentals  on  a plan  that  will 
distribute  a burden  of  this  reimbursement  in  the  metropolitan 
district  in  such  a way  that  the  entire  community  that  is 
benefited  by  the  system  should  bear  its  just  proportion  of 
this  charge. 

The  Cambridge  Board  of  Trade  has  interested  itself  in  this 
public  question,  and  upon  the  recommendation  of  a joint 
committee,  consisting  of  the  members  of  the  committee  on 
legislative  affairs  and  municipal  affairs,  has  adopted  formally 
a statement  of  its  opinion  of  this  subject,  which  is  as  follows: 

Statement  of  the  Position  of  the  Cambridge  Board  of  Trade 

RELATIVE  TO  THE  FINANCIAL  CONDITION  OF  THE  BoSTON  ElE- 

VATED  Railway  Company. 

The  Boston  Elevated  Railway  Company,  in  presenting  its  statement 
to  the  Special  Commission  to  consider  the  Financial  Condition  of  the 
Company,  states  that  among  the  reasons  for  action  in  its  favor  by  this 
Commission  is  a report  by  the  Public  Service  Commission,  in  which  re- 
port it  appears  that  no  careful  investigation  of  the  Boston  Elevated  Railway 
Company  has  been  made.  The  Cambridge  Board  of  Trade  requests  this 
Special  Commission  to  make  a thorough  investigation,  through  the 
facilities  of  the  Public  Service  Commission  or  otherwise,  of  the  com- 
jiany’s  true  financial  condition.  This  condition  can  be  determined  only 
after  careful  study  of  the  methods  and  books  of  the  company  in  the  past. 
This  investigation  should  include  definite  recommendations  for  changes 
in  the  company’s  methods  of  operation  or  finance  if  any  such  arc  favored. 
The  Cambridge  Board  of  Trade  also  requests  that  the  results  of  the  in- 


1917.] 


HOUSE  — No.  1875. 


137 


vestigation  shall  be  hiade  public  before  this  Special  Commission  reaches 
its  final  conclusions,  so  that  all  persons  interested  may  have  the  oppor- 
tunity to  offer  suggestions  based  thereon. 

Until  the  Cambridge  Board  of  Trade  has  had  the  opportunity  to  con- 
sider the  results  of  the  thorough  investigation  requested  to  be  made  into 
the  past  operation  and  finance  of  the  company,  the  Cambridge  Board  of 
Trade  is  opposed  to  the  suggestions  made  by  the  company  on  page  51 
of  its  brief  numbered  1 to  5 and  7 to  9 inclusive. 

As  to  the  sixth  suggestion  of  the  company  in  its  brief,  regardless  of 
the  necessity  for  financial  relief  for  the  Boston  Elevated  Railway  Com- 
pany, the  Cambridge  Board  of  Trade  is  in  favor  of  the, purchase  of  the 
Cambridge  subway  by  the  State  if  it  can  be  bought  on  reasonable  terms 
and  with  a satisfactory  lease,  if  the  option  of  purchase  in  the  city  of 
Cambridge  be  preserved,  if  no  diminution  of  revenue  or  taxes  now  paid 
thereon  to  the  city  of  Cambridge  shall  result  therefrom,  and  if  the 
Cambridge  subway  shall  be  under  the  control  of  whatever  body  shall 
have  the  control  of  the  subways  that  are  wholly  in  Boston,  one  member 
of  such  body  to  be  a resident  of  Cambridge. 

Respectfully  submitted, 


Joint  Committee  ox  Legislative  Affairs  and  Municipal  Affairs, 


Gilbert  A.  A.  Pevey,  Chairman, 
Robert  Walcott. 

Stoughton  Bell. 

Edward  Cohen. 

Jeremiah  Crowley. 

George  L.  Dow. 

J.  Joseph  Foley. 

J.  Frank  Facey. 


John  J.  McCarthy. 
Edward  F.  McClennen. 
William  M.  McDermod. 
George  F.  McKellegett. 
Clement  G.  Morgan. 
Harry  A.  Penniman. 
Frank  H.  Thomas. 
George  B.  Wason. 


]\Jr.  Beck.  Mr.  Chairman,  at  the  last  hearing  I told  you 
that  Chelsea  would  have  something  to  say  about  the  8-cent 
transfer.  I have  a few  people  here  to-day  who  would  like 
to  be  heard  on  the  matter. 

The  Chairman.  The  committee  is  now  hearing  the  city 
of  Cambridge,  Senator  Beck,  and  we  wYiuld  like  to  finish  with 
them  first. 

Mr.  Beck.  Xery  well. 


Gilbert  A.  A.  Pevey,  Chairman  of  the  Legislative  Committee, 
Cambridge  Board  of  Trade. 

The  Mayor  has  reail  the  report  of  the  committee  of  the 
Board  of  Trade,  which  I intended  to  read,  and  perhaps 


138 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


amplify  a little  bit  before  your  committee.  Perhaps  his 
reading  of  it  may  have  saved  me  the  necessity  of  reading  it. 

I will  state  that  I appear  as  chairman  of  a joint  committee 
of  the  Board  of  Trade,  consisting  of  two  committees,  one  the 
committee  on  municipal  affairs,  and  the  other  the  committee 
on  legislative  affairs. 

The  committee  signing  this  report,  some  fifteen  members, 
I think,  the  joint  committee,  has  given  this  matter  the  best 
attention  that  we  could  under  the  circumstances,  in  view  of 
the  fact,  as  we  say  in  ou‘r  report,  that  there  have  been  no 
special  investigation  or  special  facts  submitted  which  would 
give  us  the  opportunity  to  make  a more  careful  investigation 
or  study,  and  we  have  given  this  matter  a great  deal  of 
thought  and  had  a special  meeting  of  the  Board  of  Trade 
called  for  last  Wednesday  night.  Notices  were  sent  to  the 
entire  800  members  of  the  organization,  stating  the  special 
object  of  the  mieeting  and  the  special  subject  for  considera- 
tion. We  had  a large  meeting  of  the  Board  of  Trade,  and 
the  matter  was  discussed  fully  and  freely.  As  read  by  the 
Mayor:  — 

The  Lieutenant-Governor.  Excuse  me,  Mr.  Pevey. 

Mr.  Pevey.  Yes. 

The  Lieutenant-Governor.  What  report  by  the  Public 
Service  Commission  do  you  refer  to  in  there? 

Mr.  Pevey.  I refer  to  the  brief  of  the  Elevated  Railway, 
on  page  2.  This  relates  to  their  investigation  of  this  subject, 
under  chapter  149,  Resolves  of  1914,  page  2,  item  3: 

The  Commission  then  gave  the  following  as  important  reasons  for 
reaching  this  decision : — 

Item  3 I am  now  reading. 

Even  if  the  company  should  ask  for  such  a change,  and  if  its  need 
for  relief  were  apparent,  the  question  as  to  what  form  such  relief  should 
take  would  be  one  which  would  call  for  the  best  thought  which  the 
community  could  give  it.  Assuming  that  no  improper  diversion  of 
funds  or  waste  through  mismanagement  could  be  found,  a matter 
which  would  of  course  recjuire  careful  investigation,  it  would  still  re- 
main a question  whether  fares  should  he  raised  or  whether  the  financial 
situation  should  be  improved  by  other  changes  in  conditions. 


1917.] 


HOUSE  — No.  1875. 


139 


The  Lieutenant-Goveenor.  I would  like  to  have  that 
report  identified,  so  that  we  can  refer  to  it  hereafter. 

Mr.  Pevey.  This  is  the  report  of  the  Public  Service  Com- 
mission, contained  in  the  brief.  “The  Commission  made  a 
report  to  the  Legislature  on  the  9th  day  of  April,  1915;” 
that  is,  a report  of  the  Public  Service  Commission  to  the 
Legislature. 

The  Lieutenant-Governor.  Does  that  have  a document 
number  on  it? 

Commissioner  Macleod.  The  title  must  be  on  the  first 
page  if  it  was  printed  as  a house  document. 

Mr.  Pevey.  I have  the  brief  of  the  Elevated  Railroad, 
Mr.  Chairman.  I don’t  find  the  house  document  number. 
It  is  referred  to  in  the  brief  of  the  railroad. 

Commissioner  Macleod.  The  Commission  will  get  the 
copy  of  that  and  put  it  in  as  a part  of  the  record. 

Mr.  Pevey.  So  far  as  the  Board  of  Trade  was  able  to 
ascertain,  no  report  of  your  investigation  has  been  made  to 
this  Commission,  and  we  can  hardly  conceive  that  such  a 
Commission  as  this  would  report  to  the  Legislature  without 
first  having  an  investigation. 

Commissioner  Macleod.  There  was  a considerable  ac- 
counting investigation  made  at  that  time. 

Mr.  Pevey.  In  1914? 

Commissioner  Macleod.  Yes.  It  was  filed  as  one  of  the 
appendices  of  this  report,  embracing  the  accountant’s  report 
on  the  expenditures  of  the  company  for  the  period  of  two  or 
three  years  last  preceding. 

Mr.  Pevey.  But  as  I understand,  and  as  our  committee 
understands,  there  has  been  no  investigation  by  this  Com- 
mission such  as  was  adopted  as  a precedent,  perhaps  in  the 
Bay  State  Rate  case,  and  we  think  this  matter  is  of  such 
importance  that  we  are  unable  to  come  to  any  definite 
conclusion  without  knowing  more  of  the  facts  and  without 
having  the  results  of  that  investigation,  when  made,  made 
known  to  our  committee. 

So  for  that  reason,  with  that  explanation  and  that  sug- 
gestion for  relief,  made  by  the  Elevated  railroad  in  their 
brief,  as  to  the  proposed  purchase  or  taking  over  of  the 
Cambridge  subway,  we  have  no  recommendations  to  offer. 


140 


BOSTOX  ELEVATED  RAILWAY. 


[Mar. 


We  said  in  regard  to  the  subway,  as  was  read  by  iNIayor 
Rockwood:  — 

Regardless  of  the  necessity  for  financial  relief  for  the  Boston  Elevated 
Railway  Company,  the  Cambridge  Board  of  Trade  is  in  favor  of  the 
purchase  of  the  Cambridge  subway  by  the  State  if  it  can  be  bought  on 
reasonable  terms  and  with  a satisfactory"  lease,  if  the  option  of  purchase 
in  the  city  of  Cambridge  is  preserved,  if  no  diminution  of  revenue  or 
taxes  now  paid  thereon  to  the  city  of  Cambridge  shall  result  therefrom, 
and  if  the  Cambridge  subway  shall  be  under  the  control  of  whatever 
body  shall  have  the  control  of  subways  that  are  wholly  in  Boston,  one 
member  of  such  body  to  be  a resident  of  Cambridge. 

With  that  explanation,  gentlemen,  the  Cambridge  Board 
of  Trade  at  the  present  time  cannot  see  how  they  can  make 
any  suggestions  to  this  Commission,  and  we  honestly  hope 
that  this  Commission  will  undertake  an  investigation  which 
will  be  public  in  its  character  and  give  us  the  result  of  their 
investigation,  and  we  will  give  you  the  best  assistance  that 
we  can  from  our  study  of  this  investigation,  and  of  the  facts 
which  come  out  from  such  investigation  when  made. 

The  Lieutenant-Governor.  Is  there  anybody  else  from 
the  city  of  Cambridge? 

Mr.  PeA'EY.  Yes,  ]\Ir.  McClennen,  of  the  firm  of  Dunbar, 
X'utter  k McClennen. 


Edward  F.  McClennen,  Esq. 

The  Lieutenant-Governor.  For  whom  do  you  appear? 

Mr.  McClennen.  I am  a member  of  the  municipal 
affairs  committee  of  the  Cambridge  Board  of  Trade,  and 
therefore  of  the  joint  committee  of  that  body  which  has 
considered  this  matter. 

The  Lieutenant-Governor.  You  may  proceed. 

]\Ir.  McClennen.  I would  like  to  suggest  one  addition 
to  what  Mr.  Revey  has  said.  There  is  always  danger,  when 
an  investigation  of  this  kind  is  sought,  that  we  may  be  con- 
fronted with  a statement  that  tlie  situation  is  such  tliat  im- 
mediate action  in  relief  of  the  Boston  Elevated  Railway  Com- 
pany is  needed.  The  one  way  in  which,  on  tlie  face  of  their 
figures,  it  would  seem  as  if  some  relief  was  needed  is  in  the 


1917.] 


HOUSE  — Xo.  1875. 


141 


matter  of  some  plan  by  which  new  capital  can  be  obtained 
for  these  necessary  expenses,  which  are  capital  expenditures. 

Whatever  may  be  their  financial  situation,  it  is  fairly  evi- 
dent that  so  long  as  they  pay  5 per  cent  or  on  their  stock 
they  are  not  going  to  get  a very  free  market  for  stock  at  par, 
and  of  course  they  cannot  and  should  not  be  permitted  to 
issue  stock  at  less  than  par. 

I understand,  subject  to  correction,  that  they  cannot  issue 
any  more  bonds  because  their  bonds  are  now  issued  to  the 
extent  of  the  par  value  of  the  stock.  They  need  presumably 
additional  capital  for  their  extensions  and  those  other  ex- 
penditures which  are  to  be  made  out  of  capital.  They  need 
it  soon.  By  the  situation  which  now  exists  there  is  presented 
the  opportunity  for  them  to  get  this  capital  without  presently 
putting  it  upon  the  community,  either  in  the  form  of  addi- 
tional taxes  or  relief  of  the  Elevated  from  taxes,  or  additional 
fares.  And  that  is,  by  the  acquisition  of  the  Cambridge  sub- 
way by  public  authorities  and  preferably  by  the  Common- 
wealth. 

The  Elevated  shows  in  its  own  presentment  of  its  case  a 
disposition  favorable  to  the  acquisition  of  that  highway  by 
the  Commonwealth,  and  it  seemed  as  if  it  presented  an  ex- 
cellent opportunity  for  its  acquisition;  of  course,  on  such 
terms  as  will  not  in  any  way  increase  the  burden  upon  the 
community. 

The  one  respect  in  'which  Cambridge  is  particularly  con- 
cerned as  to  the  terms  upon  which  the  subway  may  be  ac- 
quired is  in  the  matter  of  taxation.  Cambridge  is  badly 
situated  as  to  its  tax  rate  at  present.  Nothing  should  be 
done  which  should  put  any  additional  burden  upon  it  or  take 
from  it  any  property  on  which  taxes  are  now  paid  without 
some  consideration  being  shown  to  it  in  return. 

This  is  to  be  borne  in  mind  with  reference  to  the  Cam- 
bridge subway.  While  it  is  situated  — the  subway  — wholly 
in  Cambridge,  it  is  a part  of  a short  through  stretch,  some  of 
which  is  the  bridge  and  some  of  which  is  the  tunnel  in 
Boston.  Ordinarily,  when  a subway  or  other  line  of  com- 
munication is  wholly  within  a municipality,  the  way  in 
which  the  municipality  suffers  in  not  getting  taxes  may  be 


142 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


offset  by  the  advantages  to  the  traveling  public  in  that  com- 
munity, in  getting  lower  rates  in  the  use  of  that  facility. 

The  Boston  subways  are  used  very  largely  either  by  those 
persons  who  live  within  the  municipality  or  by  those  persons 
who  are  doing  business  within  the  municipality. 

That  is  not  true  of  the  Cambridge  subway.  It  is  a trans- 
portation facility  which  is'  very  important  perhaps  to  the 
districts  beyond  Cambridge,  more  important,  perhaps,  than 
Cambridge  itself.  Those  who  use  it  are  familiar  with  the 
very  large  amount  of  traffic  that  goes  beyond  Cambridge. 

It  is  seldom  that  it  is  possible  for  a citizen  of  Cambridge 
to  sit  much  before  he  gets  home,  because  there  is  such  a 
large  volume  of  traffic  that  goes  beyond  Cambridge. 

It  is  to  a great  extent  a bridge  frorh  Boston  to  Arlington, 
Watertown,  Newton  and  various  other  places.  Therefore, 
there  is  not  even  the  ordinary  reason  why  Cambridge  should 
be  called  upon  to  forgive  anything  in  the  matter  of  taxes, 
because  of  the  fact  that  this  conduit  is  one  which  exists 
wholly  for  their  benefit. 

The  Board  of  Trade  is  interested  to  have  the  Common- 
wealth acquire  the  subways,  and  seriously  interested  in 
seeing  that  it  is  upon  such  terms  that  Cambridge  as  a 
municipality  does  not  suffer. 

Commissioner  Macleod.  iNIr.  McClennen,  did  I under- 
stand that  your  committee  reported  adversely  on  all  the 
other  suggestions,  with  the  exception  of  the  purchase  of  the 
subway  by  public  authorities? 

Mr.  ^McClennen.  Adversely  in  their  present  state  of 
knowledge  of  the  financial  condition  of  the  Boston  Elevated 
Railroad  Company. 

Commissioner  Macleod.  I assumed  that  that  objection 
applied  also  to  No.  8,  the  return  of  the  8500,000  deposited  with 
the  State.  Assuming  that  the  purpose  for  which  that  de- 
l)osit  was  made  had  been  accomj)lished,  would  not  the  same 
argument  ai)])ly  in  the  case  of  that  dei)osit  and  in  the  case 
of  the  subway?  That  is,  that  it  would  release  a certain 
amount  of  money  for  ca])ital  purposes  of  the  com])any  in  a 
manner  which  would  not  necess-itate  further  tax  uj)on  the 
public  through  the  issuance  of  an  equivalent  amount  of  new 
capital. 


1917.] 


HOUSE  — No.  1875. 


143 


Mr.  McClennen.  You  embarrass  me  somewhat.  I am 
here  as  a member  of  a committee  that  has  made  a report, 
and  we  are  authorized  to  elaborate  on  that  report  and  show 
why  it  should  prevail.  I don’t  feel  that  I am  in  a position’ 
to  speak  counter  to  the  report  in  any  way.  I don’t  feel 
called  upon  to  present  any  argument  in  opposition  to  your 
suggestion. 

Commissioner  Allen.  Mr.  McClennen,  does  your  or- 
ganization also  wish  Cambridge  to  ha;ve  the  first  option 
on  buying  the  subway,  or  purchase  by  the  Commonwealth, 
with  the  right  to  buy  it  back  at  some  time  in  future?  ' 

Mr.  McClennen.  That  is  the  position  which  the  Board 
of  Trade  took.  Not  that  they  should  have  the  option  pres- 
ently to  purchase  the  subway,  but  that  the  existing  option 
in  the  existing  Cambridge  subway  legislation  should  not  be 
taken  away  from  the  city  of  Cambridge. 

Commissioner  Allen.  Well,  that  they  should  have  the 
right  to  acquire  it  upon  those  terms,  before  the  Common- 
wealth is  permitted  to  acquire  it? 

]Mr.  McClennen.  No,  I don’t  understand  it  that  way; 
but  that  what  is  asked  is  legislation  permitting  the  acquisi- 
tion of  the  subway  by  the  Commonwealth  at  the  present 
time,  the  existing  right  of  the  city  of  Cambridge  to  purchase 
the  subway  according  to  the  terms  of  the  existing  legislation 
not  to  be  diminished. 

Commissioner  Eastman.  If  the  public  should  take  over 
the  Cambridge  subway,  do  you  think  it  should  be  done  by 
the  Commonwealth  direct,  or  by  a metropolitan  district 
especially  created  for  that  purpose? 

]\Ir.  McClennen.  That  is  not  a subject  which  we  consid- 
ered specifically.  It  was  considered  whether  there  should  be 
a present  acquisition  by  the  city  of  Cambridge  or  by  the 
Commonwealth,  but  we  have  not  been  into  the  question  of 
what  subordinate  part  of  the  Commonwealth  should  acquire 
it. 

Commissioner  Eastaian.  I sui)pose  from  a legal  stand- 
point it  is  feasible  to  create  a district  for  the  purpose  of 
taking  that  over,  is  it  not? 

Mr.  McClennen.  That  is  a question  of  law.  It  does 


144 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


not  occur  to  me  that  there  is  difficulty  in  the  way  of  havin^]^ 
a district  somewhat  commensurate  with  the  district  served 
by  the  subway,  that  should  acquire  it. 

Senator  .Bates.  You  stated  you  are  not  in  position  to 
oppose  your  committee’s  report,  but  will  somebody  defend 
that  portion  of  the  report  which  objects  to  the  return  of  the 
S50(),()0()?  Will  you  state  why  you  think  it  ought  not  to  be 
returned? 

Mr.  McClennen.  Why  the  Board  of  Trade  thought  it 
ought  not  to  be  returned  is  a composite  of  the  intelligence  of 
a good  many  gentlemen.  • ^ 

Senator  Bates.  Numerically  or  — 

]Mr.  McClennen.  Yes.  x\nd  I cannot  inform  you  as  to 
the  reasons  which  actuated  the  different  ones  that  took  that 
position. 

Senator  Bates.  Can  any  of  the  composite  intelligence  of 
the  committee  tell  us  why  they  opposed  it? 

Mr.  McClennen.  I don’t  know. 

Senator  Bates.  Are  there  any  here?  Can  you  tell  us, 
Mr.  Pevey,  why  it  should  not  be  returned? 

Air.  Pevey.  I was  going  to  call  on  Judge  Walcott  as  the 
next  speaker,  and  I think  if  you  will  hear  him  a few  minutes, 
your  question  might  be  answered.  Judge  Walcott  is  the 
chairman  of  the  municipal  committee  of  the  Board  of  Trade, 
which,  with  the  committee  on  legislative  affairs,  has  been 
sitting  jointly  on  this  matter  in  behalf  of  the  (^ambridge 
Board  of  Trade. 

Robert  Walcott,  Ksq. 

I don’t  know  that  I can  answer  that  question,  but  as  I 
understand  it,  that  $500, ()()()  was  paid  in  according  to  the 
legislation  in  1903  and  1904,  as  a fund  from  which  land 
damages  should  be  paid  for  original  takings.  I suppose  the 
reasons  which  held,  requiring  that  fund  against  land  damages 
in  the  first  taking,  would  ap])ly  to  holding  it  for  future 
takings. 

Personally,  I am  jiot  ijiformed  whether  all  the  land  dam- 
ages of  the  last  taking  have  been  settled  or  not.  Tliat  is 
merely  my  ])ersonal  o])inion,  as  one  of  20  who  liave  consid- 
ered that  subject. 


1917.] 


HOUSE  — No.  1875. 


145 


The  point  which  I would  like  to  emphasize  in  the  com- 
mittee’s report  was  that  we  were  invited  to  express  an 
opinion  on  the  remedy  which  might  be  applied  to  the  exist- 
ing situation,  but  we  were  not  given,  some  of  us,  sufficient 
information  of  an  impartial  character  on  the  existing  situa- 
tion. All  we  have  is  the  report  of  the  Public  Service  Com- 
mission of  1914,  quite  brief,  on  the  finances  of  only  the  very 
recent  years. 

We  understood  that  the  Public  Service  Commission  laid 
down  in  the  Bay  State  Street  Railway  case  two  principles. 
First,  a fair  return  on  the  actual  assets  employed  should  be 
had  by  the  road;  and,  second,  it  should  be  shown  that  the 
road  was  run  with  reasonable  efficiency,  and  before  giving  it 
additional  financial  relief  in  raising  fares  it  should  be  shown 
that  there  were  no  economies  that  could  be  used  in  place  of 
a raising  of  fares  or  some  other  financial  relief. 

We  think  that  before  expressing  any  intelligent  opinion 
on  the  subject  here,  your  Joint  Commission,  or  the  Public 
Service  Commission,  should  give  us  the  benefit  of  some  care- 
ful investigation  similar  to  what  was  made  in  the  Bay  State 
case  of  the  operation,  physically  and  financially,  of  this  rail- 
road system,  and  that  is  not  available  to  our  committee  at 
the  present  time. 

That  we  should  like  to  have  before  we  express  ourselves 
on  any  of  the  provisions  for  relief  except  the  provision  for 
public  ownership  of  the  Cambridge  subway.  And  we  don’t 
see  how  any  intelligent  opinion  can  be  given  merely  on  a 
brief  of  the  Boston  Elevated  Railway,  without  the  stamp  of 
your  Commission,  or  the  Public  Service  Commission’s  part 
of  it,  that  those  ^statements  are  properly  marshaled  and 
correct. 

Commissioner  Eastman.  You  agree  with  Mr.  McClennen, 
I suppose,  that  such  investigation  should  be  thorough,  and 
on  the  face  of  the  Elevated’s  statement,  there  is  no  occasion 
for  haste? 

Mr.  Walcott.  Absolutely.  That  is  all  I wanted  to  say, 
Mr.  Chairman. 

The  Chairman.  Thank  you;  does  anybody  else  appear  for 
Cambridge? 


146 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Bangs.  I am  from  the  Boston  Real  Estate  Exchange, 
Mr.  Chairman. 

The  Lieutenant-Governor.  You  don’t  appear  for  the 
city  of  Cambridge? 

Mr.  Bangs.  No. 

The  Lieutenant-Governor.  Pardon  me  a moment,  then. 
Does  anybody  else  appear  from  the  city  of  Cambridge? 

, Mr.  John  Fitzpatrick. 

One  point,  I think,  that  has  escaped  the  notice  of  all 
previous  speakers,  is  this:  The  Boston  Elevated  Railway 
Company  gets  its  franchise  from  the  State.  It  seems  if  we 
take  any  steps  such  as  have  been  proposed  by  the  company, 
we  will  break  that  franchise,  and  if  we  break  the  franchise, 
it  gives  them  liberty  to  do  as  they  please  thereafter.  I 
think  it  is  an  important  matter  and  should  be  considered. 

Another  thing  surprises  me.  If  the  Boston  Elevated  Rail- 
way Company  is  so  anxious  to  raise  money  why  they  would 
not  propose  the  sale  of  some  portion  of  their  property  which 
is  revenue  producing.  I would  not  object  to  the  Boston 
Elevated  selling  to  the  city  of  Cambridge  or  the  State  of 
Massachusetts  the  seventh  division  of  the  Boston  Elevated 
Railway,  and  let  us  run  that.  Let  ns  have  a part  of  that 
as  a municipal  railroad  if  you  please.  There  has  been  no 
suggestion  along  those  lines. 

The  other  points  which  occur  to  my  mind  have  been  well 
brought  out  by  the  previous  speakers,  that  there  should  be 
an  investigation  of  the  affairs  of  the  company,  and  I am  of 
the  opinion  that  the  condition  of  the  company  at  this  time  is 
largely  due  to  the  extravagance  and  mismanagement  on  the 
part  of  the  company.  If  they  have  managed  that  property 
in  such  a way  as  to  get  into  a hole,  why  the  State  or  the  city 
of  Cambridge  is  not  bound  to  rescue  those  men.  I cannot 
see  why  we  should  rescue  them. 

Therefore,  I am  o])posed  to  the  ])urchase  of  the  subway  by 
Cam])ridge  or  the  State  of  Massachusetts,  and  I would  like 
to  have  some  speaker  that  may  follow  explain  it  in  such  an 
event  as  the  comj)aiiy  getting  any  of  the  concessions  asked 
for,  if  that  will  break  the  contract  with  the  State. 


1917.] 


HOUSE  — No.  1875. 


147 


Commissioner  East;man.  I would  like  to  ask  Mr.  McClen- 
nen  a question. 

Under  the  legislation  of  1897  the  fare  which  the  Elevated 
may  charge  is  limited  to  5 cents  for  the  period  of  25  years. 
Now,  in  deciding  whether  or  not  an  increase  in  fares  shall  be 
permitted  at  this  time,  what  effect  do  you  think  that  con- 
tract should  have  on  the  situation?  Would  the  Elevated 
Road  be  considered  as  an  ordinary  street  railway  would  be, 
and  should  the  purchase  be  decided  on  the  same  principle? 

Mr.  McClennen.  That  question  imposes  on  me  rather  a 
larger  contract  than  I had  undertaken  for  this  morning.  It 
would  seem  to  me  that  the  Boston  Elevated  Railway  Com- 
pany should  not  be  released  from  the  conditions  which  it  has 
made.  I realize  that  when  you  are  dealing  with  a public 
transportation  facility,  it  has  got  to  have  the  capital  with 
which  to  operate,  and  it  has  got  to  have  a sufficient  return 
for  that  (Capital  in  sight  so  that  it  can  get  it.  And  it  is  con- 
ceivable that  the  situation  might  exist  where  something  has 
got  to  be  done  by  way  of  relieving  the  company  from  its 
existing  obligations  because  it  is  inevitable  in  order  to  get 
the  continuance  of  its  operation  and  the  service  which  the 
public  want  and  should  have.  I have  no  reason  to  believe 
that  any  such  situation  exists  here  or  is  likely  to  exist  here. 

Senator  Bates.  I would  like  to  ask  the  Mayor  what 
amount  of  taxes  the  city  would  lose  if  the  city  buys  it? 

Mayor  Rockwood.  I think  I stated  it. 

The  Lieutenant-Governor.  He  stated  it  — $15,000. 

Senator  Bates.  What  was  the  total  tax  levy  for  1915,  if 
you  can  give  me  that.  The  total  taxes  in  the  city  of  Cam- 
bridge? 

Mayor  Rockwood.  I don’t  recall  the  exact  amount.  It 
is  somewhat  less  than  $4,000,000. 


Francis  R.  Barths,  Esq. 

Mr.  Chairman  and  gentlemen,  my  name  is  Erancis  R. 
Bangs.  The  Honorable  Nathan  Matthews,  Mr.  William  J. 
McDonald  and  I are  a committee  from  the  Boston  Real 
Estate  Exchange  who  were  asked  by  the  directors  of  the 


148  BOSTON  ELEVATED  RAILWAY.  [Marl 

Real  Estate  Exchange  to  study  this  question  and  come  here 
and  express  our  views  to  you. 

]\Ir.  Matthews  has  written  a brief,  and  he  was  very  sorry 
that  he  could  not  come  up  here  and  present  it  in  person  to- 
day. But  he  is  chairman  of  this  big  meeting  about  the 
Belgian  question,  and  is  so  busy  he  could  not  possibly  come. 

So  he  asked  me  if  I would  read  this  brief  to  you.  And  I 
said  I would  do  so.  I think  it  is  very  illuminating  and 
helpful. 

Statement  of  the  Real  Estate  Exchange. 

November  28,  1916. 

The  Exchange  regards  the  adequate  transportation  of  passengers  in 
and  out  of  this  city,  on  the  streets  and  in  the  subways,  as  vital  to  the 
prosperity  of  the  community;  but  believes  that  at  the  present  moment 
no  need  has  been  shown  for  any  immediate  change  in  fares,  taxes,  or 
rents,  and  that  before  any  change  in  these  important  details  is  made 
there  should  be  a thorough  investigation  of  the  problem  of  urban  trans- 
portation in  all  social,  economic  and  financial  aspects. 

We  object  in  particular  to  any  reduction  of  the  subway  rents,  or, 
what  would  amount  to  the  same  thingj  to  a reduction  in  the  corporation 
tax  paid  by  the  Elevated  Railway,  as  a violation  of  the  subway  con- 
tracts with  the  city,  as  involving  an  increase  in  the  present  burden  of 
the  subw’ays  to  the  city,  as  an  utterly  unjust  increase  in  taxation,  and 
as  probably  entirely  unnecessary. 

1.  Violation  of  Contracts. 

The  present  subway  rentals  are  secured  by  solemn  contracts  entered 
into  betw’een  the  company  and  the  city,  in  consideration  of  which  the 
city  has  furnished  the  capital  to  build  these  structures.  Some  of  these  • 
contracts  were  ratified  on  the  part  of  the  city  by  popular  vote,  others 
by  the  mayor  and  city  council;  and  it  goes  without  saying  that  these  - 
contracts  would  not  have  been  made  except  for  the  provision  in  them 
that  the  company  should  pa}^  what  was  supposed  to  be  an  adequate 
rent.  For  the  Legislature  to  abrogate  these  contracts  in  favor  of  the 
Boston  Elevated  Railway  or  its  patrons  would  probably  be  unconst  it  u-  J 
tional  unless  accompanied  by  the  consent  of  the  city,  which  it  is  wholly  J 
unlikely  would  ever  be  given;  and  if  it  is  constitutional  to  accomplish  # 
this  end  by  the  indirect  ])rocess  of  depriving  the  city  of  its  share  of  the  I 
taxes  paid  by  the  Elevated  Railway  on  its  stock,  such  a course  would  I 
be  a breach  of  faith  with  the  city  and  its  inhabitants  both  on  the  part  t 
of  the  Legislature  and  the  comj)any.  I 

2.  Increase  in  the  Present  Burden  of  the  Subways.  % 

It  is  sometimes  assumed  that  the  subways  are  no  net  burden  to  the  I 
city,  that  is,  that  the  rents  reserved  in  the  several  leases  are  sufficient  I 


1917.] 


HOUSE  — No.  1875. 


149 


to  carty  the  loans  without  any  net  cost  to  the  city.  In  the  statement 
submitted  to  this  Commission  by  the  Elevated  Railway  it  is  said  on 
page  51  that  the  riders  on  the  cars  have  paid  ^‘the  entire  cost  of  trans- 
portation”; and  the  same  unfounded  assumption  is  made  on  page  56. 

The  fact  is  that  the  rents  fixed  for  the  subways  are  so  low  that  there 
is  a net  loss  to  the  city  of  about  a half  million  dollars  a year  as  com- 
pared to  what  the  situation  would  be  if  the  subways  were  owned  by  the 
company.  In  the  first  place  the  five  subways  for  which  rent  is  now  being 
paid  showed  in  the  fiscal  j^ear  1915-1916  a deficit  in  the  interest  and 
sinking  fund  requirements  of  S 194, 765;  and  when  the  Dorchester  tun- 
nel is  completed  this  deficit  will  be  increased  by  approximately  160,000. 
The  rent  paid  by  the  Boston  Elevated  Railway,  and  through  it  by  the 
riders  on  the  cars,  to  the  city  of  Boston  thus  falls  $250,000  short  of 
meeting  the  interest  and  sinking  fund  requirements  on  the  loans  that 
have  been  issued  by  the  city  to  build  them. 

In  addition  to  this  there  is  the  loss  of  taxes.  Assuming  a total  cost 
for  the  subways  completed  and  now  under  construction  of  $35,000,000; 
that  if  the  company  had  built  them  it  would  have  financed  them  one- 
half  by  stock  and  one-half  by  bonds;  that  the  stock  would  sell  at  par; 
and  that  the  city  would  get  the  same  percentage  of  the  company’s  cor- 
poration tax  that  it  now  gets  (about  60  per  cent) ; it  is  easy  to  compute 
that  the  loss  from  this  cause  is  about  $200,000  per  annum. 

In  addition  to  this,  bonds  have  been  issued  by  the  city  to  cover  not 
only  the  cost  of  the  original  subw^ays  and  of  the  later  subways,  but  also 
of  such  parts  of  the  earlier  subways  as  are  wasted  in  the  construction 
of  the  newer  ones,  and  the  increased  cost,  not  represented  by  operative 
value,  in  building  first  one  subway  and  then  putting  another  alongside 
or  under  it.  No  estimate  has  been  made  of  this  loss;  it  may  be  as 
much  as  $500,000,  which,  pro  rated  over  a period  of  twenty  years  of 
subway  construction,  would  be  $25,000  per  annum. 

The  fair  net  cost,  therefore,  at  the  present  time,  or  as  soon  as  the 
Dorchester  tunnel  is  completed,  of  carrying  the  subway  loans  to  the 
city  of  Boston  and  its  tax-payers  is  about  $450,000  per  annum  more 
than  the  rent  paid  by  the  Elevated  Railway,  besides  depreciation. 

As  the  total  rent  which  will  be  paid  by  the  company  when  the 
Dorchester  tunnel  is  completed  will  be  about  $1,350,000,  it  is  obvious 
that  the  city  of  Boston  and  its  tax-payers  are  now  contributing  towards 
the  cost  of  operating  the  street  railway  system  of  this  city  about  one- 
third  as  much  as  the  company  and  its  patrons  contribute  in  rent  and 
fares. 

Look  at  it  in  another  way.  Even  if  the  present  rentals  are  main- 
tained and  paid  until  the  termination  of  the  leases  and  the  city  gets  at 
that  time  a subway  system  which  is  worth  its  cost  ($35,000,000)  it  will 
have  paid  for  this  system,  in  excess  of  the  rents  received,  about  .$450,000 
a year  for  forty-five  years  more  than  it  would  if  the  subways  had  been 
financed  by  the  company  itself  and  the  entire  annual  cost  of  them  had 
been  borne  by  the  patrons  of  the  company. 


150 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


3.  The  Injustice  of  the  Proposition. 

The  present  situation,  if  it  is  as  serious  as  the  company  asserts,  is 
due  either  to  its  own  improvidence,  to  temporar}'-  conditions,  or  to  the 
inadequacy  of  the  present  fares.  There  is  no  reason  why  either  of 
these  mistakes  should  be  made  good  out  of  the  tax  levy  at  the  expense 
of  the  city  as  a corporation.  Such  a result  is  public  ownership  inverted. 
It  is  public  title  without  either  public  control  or  public  profit.  It  has 
all  the  disadvantages  of  public  ownership  with  none  of  its  benefits. 

The  stockholders  of  the  Elevated  Railway  should  not  be  allowed  to 
break,  either  directly  or  indirectly,  a series  of  solemn  contracts,  the 
last  one  entered  into  only  five  years  ago,  mereh"  to  save  them  from  the 
consequences  of  their  own  improvidence,  or  to  enable  the  company  to 
pay  dividends  of  six  instead  of  five  per  cent. 

And  the  patrons  of  the  company  who  live  in  the  eleven  outside  com- 
munities in  which  the  company  operates,  and  who  do  not  in  their  munic- 
ipal capacity  contribute  one  cent  to  the  public  burden  of  the  subway 
system,  cannot  fairly  ask  the  tax-payers  of  this  city  to  make  further 
contributions,  in  excess  of  the  generous  ones  already  referred  to,  in 
order  that  the  inhabitants  of  these  eleven  con\munities  may  be  trans- 
ported at  less  than  cost. 

4.  It  is  apparently  unnecessary,  at  least  at  the  Present  Time. 

If  the  figures  submitted  by  the  company  are  correct,  the  normal  in- 
crease in  receipts  will  apparently  put  the  company  on  a six  per  cent 
dividend  basis  within  the  next  three  or  four  years  without  any  increase 
of  fares  or  reduction  in  rents  or  taxes. 

The  company  claims  in  its  printed  statement  (page  49)  that  it  will 
require  SI, 649,794  increase  in  revenue  to  meet  the  increases  in  operat- 
ing expenses  and  fixed  charges  during  the  immediate  future  and  to 
enable  the  company  to  pay  six  per  cent  dividends,  or  in  round  num- 
bers, SI, 650, 000.  On  page  50,  however,  it  is  admitted  that  if  the  pres- 
ent annual  increase  in  traffic  is  maintained,  there  will  be  a net  increase 
in  the  revenue  available  to  meet  this  deficit  of  S536,779,  or  in  round 
numbers  S535,000.  But  this  annual  net  revenue  is  cumulative  or  pro- 
gressive. This  means  that  on  the  basis  of  the  company’s  own  statement, 
if  we  understand  it  correctly,  in  three  years,  or  a little  more  at  the 
most,  the  company  will  be  in  a position  to  meet  the  threatened  deficit 
and  pay  dividends  of  six  ])er  cent.  If  no  mistake  has  been  made,  it  is 
evident  that  the  financial  necessities  of  the  Boston  Elevated  Railway, 
having  reference  to  the  matter  of  dividends,  are  not,  on  the  company’s 
own  showing,  so  urgent  and  immediate  as  to  require  any  change  either 
in  fares,  rentals,  or  taxes,  or  legislation  of  any  kind.  A reduction  of 
one  per  cent  in  the  rate  of  dividends  paid  during  three  years  is  an  inci- 
dent which  may  arise  in  the  management  of  any  public  service  com- 
pany, and  furnishes  no  excuse  for  legislative  interference. 


1917.] 


HOUSE  — No.  1875. 


151 


In  addition,  however,  to  the  alleged  necessity  for  increased  revenue, 
the  company  contends  that  at  the  present  moment  it  finds  itself  without 
adequate  cash  or  working  capital  to  equip  the  Dorchester  tunnel.  This, 
according  to  the  figures  given  on  page  46  of  the  company's  statement, 
will  require  about  S480,000.  It  also  claims  that  it  is  without  money  to 
meet  the  other  expenditures  upon  capital  account  which  will  be  required 
in  the  near  future;  that  at  the  present  market  value  of  its  stock  it  can- 
not procure  this  capital  by  the  issue  of  fresh  stock;  and  that  it  has  no 
authority  to  issue  further  bonds. 

This  is  a situation  which  appears  to  be  proved,  and  that  relief  of 
some  sort  may  well  be  granted. 

The  company  suggests  that  the  $500,000  deposited  with  the  State 
under  the  acts  of  1894  and  1897  should  be  released  to  the  company. 
We  see  no  objection  to  this  course,  and  if  taken,  it  will  give  the  company 
all  the  money  required  to  equip  the  Dorchester  tunnel,  and  tide  over 
its  necessities  for  additional  capital  at  least  until  after  the  legislative 
session  of  1917. 

The  further  capital  which  will  be  required  to  finance  the  operations 
of  the  company  during  the  next  ten  years  can  apparently  be  obtained 
by  the  simple  process  of  selling  the  Cambridge  subway  to  the  public. 
This  course  is  now  suggested  by  the  company;  and  as  the  other  subways 
and  tunnels  are  owned  by  the  public  there  can  be  no  objection  on  prin- 
ciple to  the  inclusion  of  this  one. 

The  sale  of  the  Cambridge  subway  at  cost  would  give  the  company 
about  $9,000,000  in  cash,  which  ought  to  meet  its  needs  in  the  way  of 
additional  capital  for  many  years;  and  if  the  property  thus  sold  is 
leased  on  a 4^  per  cent  basis,  would,  according  to  the  figures  given  on 
page  70  of  the  company’s  printed  statement,  increase  the  net  income  of 
the  company  by  $170,000  per  annum,  which  is  %o  1 per  cent  on  the 
company’s  stock.  A portion  of  this  gain  would,  of  course,  be  at  the 
expense  of  the  public  in  a reduction  of  the  company’s  corporation  tax), 
and  60  per  cent  of  this  part  of  the  company’s  annual  gain  from  the 
transaction  would  be  contributed  by  the  city  of  Boston.  This  would, 
however,  be  a relatively  small  sum  and  need  not,  it  would  seem  be  re- 
garded as  in  itself  a decisive  argument  against  the  plan. 

5.  Need  of  a Careful  Invedigation. 

Before  the  purchase  of  the  Cambridge  subway  on  public  account  is 
made,  or  any  other  change  in  the  present  laws,  the  Exchange  believes 
that  there  should  be  a thorough  examination  of  the  whole  problem  of 
transportation  in  this  community,  and  of  the  fair  apportionment,  from 
the  standpoint  of  all  interests,  — stockholders,  patrons,  and  property 
owners,  — of  the  annual  cost  to  create  and  maintain  the  system;  and 
that  if  this  joint  commission  has  not  time  to  do  the  work  itself  in  such 
a thorough  manner  that  everybody  will  be  satisfied  with  the  result,  it 
should  seek  an  extension  of  time,  or  recommend  the  a})pointment  of  a 


152 


BOSTON  ELEVATED  RAILWAY. 


[War. 


new  commission  which  should  attack  the  problem  early  next  year  and 
be  ready  with  a solution  of  it  which  can  be  enacted  into  law  before  the 
adjournment  of  the  Legislature  of  1917. 

A situation  arising  out  of  twenty  years  of  combined  private  and 
public  ovmership,  the  complications  and  difficulties  of  which  are  new 
and  have  only  just  been  made  public,  ought  not  to  be  dealt  with  by  a 
public  board  unless  it  has  had  the  time  to  investigate  and  understand 
the  problem  in  all  its  aspects. 

At  the  present  time  the  city  of  Cambridge  has  the  right  to  purchase 
the  Cambridge  subway.  If  it  should  exercise  this  option  at  once,  this, 
together  vdth  the  release  of  the  $500,000  deposited  with  the  State, 
would  be  all  the  legislation  that  seems  to  be  needed  at  the  present  time. 
But  if  the  city  of  Cambridge  declines  to  buy  the  subway  at  the  present 
time,  the  State  could  take  it  over  sybject  to  the  rights  of  the  city  of 
Cambridge,  and  there  would  be  probably  no  annual  loss  at  a 4^  per 
cent  rental  owing  to  the  fact  that  the  State  can  borrow  money  at  lower 
rates  than  the  city  of  Cambridge  could.  There  would,  however,  remain 
the  loss  in  taxes,  and  the  Exchange  believes  that  this  matter,  as  well  as 
the  usual  losses  to  the  city  of  Boston  of  the  present  subways,  should, 
if  there  is  to  be  any  change  in  the  system,  be  treated  from  a compre- 
hensive metropolitan  standpoint.  But  the  proper  details  of  such  a 
system  would  require  careful  study,  and  this  study  should  be  given  to 
them  before  any  change  is  reported  by  this  Commission  or  any  similar 
board. 

If  this  Commission  feels  that  it  can  give  this  question  sufficient  at- 
tention between  now  and  the  fifteenth  day  of  next  January',  well  and 
■good;  but  if  not,  the  Commission  should  not  hesitate  to  ask  either  for 
an  extension  of  time  or  for  the  transfer  of  the  work  to  another  body. 

One  thing  at  least  seems  to  be  perfectly  clear  as  the  result  of  this 
discussion.  Neither  the  Commission  nor  the  people  of  this  citj'  should 
be  stampeded  into  the  adoption  of  a hasty  and  possibly  unjust  solution 
of  a problem  that  seems  to  require  no  immediate  change  in  the  present 
system  or  the  present  laws,  except  such  changes  as  vill  put  the  company 
in  possession  of  sufficient  cash  capital  to  carry  on  its  business  during 
the  next  few  j^ears.  After  this  period  the  company,  unless  its  own  cal- 
culations are  at  fault,  should  have  no  difficulty,  without  any  increase 
of  fares,  or  any  reduction  in  rents  or  taxes,  in  earning  all  the  money 
needed  to  oi)erate  the  system,  pay  dividends  of  six  per  cent,  and  put 
its  stock  at  a price  wdiich  will  enable  the  company  to  sell  additional 
issues  on  the  market. 


Mr.  Matthews  asked  me  to  read  that  to  you,  gentlemen, 
and  also  to  state  that  he  would  be  veiw*  glad  to  come  uj) 
here  at  some  time  if  you  want  him  to  and  answer  any  ques- 
tions which  you  may  desire  to  ask  him  about  it. 


1917.] 


HOUSE  — No.  1875. 


153 


Senator  Beck.  May  Chelsea  be  heard  now? 

The  Lieutenant-Governor.  Wait  just  a moment.  Is 
there  any  one  else  from  Cambridge  who  desires  to  be  heard 
this  morning?  Does  anybody  here  represent  the  Boston 
Chamber  of  Commerce?  [No  response.] 

The  United  Improvement  Association?  [No  response.] 

The  Boston  Real  Estate  Association?  [No  response.] 

The  Alassachusetts  Real  Estate  Exchange?  [No  response.] 

The  State  Board  of  Trade? 

Mr.  Albert  F.  H ask  el. 

I represent  the  State  Board  of  Trade,  as  Chairman  of  the 
Committee  on  ^Municipal  Affairs.  But  I do  not  desire  to  be 
heard. 

The  Lieutenant-Governor.  The  Metropolitan  Improve- 
ment League?  [No  response.] 

The  Real  Estate  Exchange  and  Auction  Board? 

Mr.  Bangs.  That  is  the  one  I represent,  usually  called 
the  Boston  Real  Estate  Exchange  although  you  have  just 
read  the  full  name  of  it. 

The  Lieutenant-Governor.  Now,  Senator  Beck? 

Mr.  Beck.  I would  like  to  call  on  Ex-Mayor  Edward  E. 
Willard  of  Chelsea. 

lion.  Edward  E.  Willard,  Ex-Mayor  of  Chelsea. 

Your  Honor  and  gentlemen  of  the  Commission,  the  feature 
which  I will  speak  upon  and  which  interests  us  most  will  be 
the  8-cent  fare. 

We  have  been  seeking  for  some  time  to  get  what  we 
consider  our  just  dues  in  seeking  a 5-cent  fare  into  Boston. 
At  the  present  time  we  have  the  privilege  of  going  as  far  as 
Scollay  Square,  and  then  by  buying  an  8-cent  check  at  the 
time  we  pay  ,the  fare,  we  can  proceed  on  to  the  Boston 
Elevated.  If  any  one  could  possibly  find  statistics  to  show, 
they  would  probably  find  that  those  who  pay  the  5-cent 
fare,  or  90  per  cent  of  them,  get  less  probably  for  their 
money  than  a great  many  of  the  communities.  You  would 
probably  find  that  most  of  them  did  not  exceed  4 miles’ 
ride,  coming  from  Revere  or  Chelsea. 


154 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Chelsea,  as  you  know,  is  on  the  trunk  line  of  the  Bay 
State  Street  Railway,  leading  in-  from  the  north,  and  most 
of  our  people  or  a great  many  of  them,  the  majority  of  the 
people,  come  in  every  day  to  the  city.  Many  of  these 
people  go  beyond  Scollay  Square,  perhaps  a distance  of  a 
quarter  or  half  a mile,  and  then  it  becomes  necessary  for 
them  to  get  the  8-cent  check.  That  does  not  seem  much,  as 
you  consider  one  check,  but  it  is  4 cents  a day,  24  cents  a 
week,  $12  a year,  and  $12  a year  represents  probably  more 
than  a week’s  pay  for  half  the  people  who  buy  the  8-cent 
check.  It  means  a great  deal  to  them. 

On  the  other  hand  there  are  three  bridges  which  are  a 
great  nuisance  to  the  people,  coming  from  the  north  of 
Boston,  and  that  oftentimes  means  delay  to  a person  in 
getting  in,  and  to  avoid  that  a great  many  people  come  a 
short  distance  on  the  Bay  State,  and  change  at  the  center 
of  Chelsea,  at  Bellingham  Station,  and  then  proceed  through 
the  East  Boston  tunnel  in  that  direction. 

In  that  case  they  get  very  little  from  the  Bay  State  Street 
Railway,  and  most  of  them  proceed  and  stop  here  in  the 
center  of  the  city  around  the  shopping  district.  You  will 
probably  find  in  the  records  of  the  Public  Service  Commis- 
sion the  exact  numbers,  so  far  as  they  can  get  at  such  people 
who  do  buy  the  8-cent  checks.  But  there  is  a falling  off  in 
the  8-cent  check  in  the  past  few  years  from  the  people 
coming  from  the  south  and  going  towards  Chelsea,  because 
oftentimes  the  conductors  say  they  have  not  any  checks, 
and  unless  a person  is  insistent  tliey  will  have  to  pay  the 
full  fare. 

Now,  we  have  been  before  the  Public  Service  Commission; 
we  have  had  some  very  large  hearings  there  representing  the 
cities  north  of  Boston,  and  we  think  we  have  presented  there 
some  very  good  reasons  that  we  should  have  liad  some  system 
devised  of  doing  away  with  tlie  old,  inadequate  system  that 
we  liave  now  of  bringing  us  three  miles  or  four  miles,  and 
possibly  five  miles  sometin^es,  once  in  a wliile,  for  the  5-cent 
fare. 

As  it  is,  if  we  proceed  beyond  Scollay  Square,  we  liave  to 
j)ay  tlie  extra  3 cents,  and  if  we  go  back  we  liave  to  pay 


1917.] 


HOUSE  — No.  1875. 


155 


another  3 cents,  so  that  we  get  the  short  end  of  it  all 
around. 

Taking  this  matter  into  consideration,  I think  you  will  see 
that  instead  of  taking  away  the  8-cent  check,  we  should  have 
a 5-cent  check  into  Boston,  a 5-cent  fare,  because  we  have 
such  a short  distance  to  run,  we  turn  so  many  thousands  of 
dollars  into  the  railroad,  and  we  have  paid  more  than  our 
proportionate  part  towards  supporting  both  the  Boston  Ele- 
vated and  the  Bay  State  Street  Railway,  and  we  feel  that  it 
would  be  a great  injustice,  added  to  what  we  call  an  injustice 
already,  to  take  away  the  8-cent  check. 

I heard  one  gentleman  say  that  you  are  not  interested 
much  in  the  8-cent  check,  but  if  they  wanted  to  go  from 
Chelsea  to  any  point  south,  the  8-cent  check  would  interest 
them. 

That  is  a matter  which  we  want  to  speak  about  at  the 
present  time.  We'  have  no  subways  to  give  away,  and  no 
financial  information  to  give  you.  We  have  been  looking  for 
a subway  for  a long  time  which  would  do  away  with  the 
bridges  and  be  a great  help,  but  the  relief  we  are  looking  for 
looks  a long  way  off.  The  only  relief  we  are  looking  for  is 
the  5-cent  fare,  and  should  we  now  lose  our  8-cent  check  we 
would  be  asking  for  bread  and  getting  a stone. 


Alderman  George  F.  Hedderson,  President,  Chelsea  Board  of 

Aldermen. 

Mr.  Chairman,  what  I have  in  mind  would  be  merely  a 
repetition  of  what  has  already  been  said  by  our  former 
mayor  in  that  he  has  quite  fully  covered  the  subject  from  the 
Chelsea  end  of  it. 

I merely  want  to  add  this,  that  at  last  night’s  meeting  of 
the  Board  of  Aldermen  of  Chelsea,  a resolution  was  adopted 
unanimously  objecting  to  the  discontinuance  of  the  8-cent 
check.  The  mayor  has  covered  the  ground  of  our  request  for 
a 5-cent  check  instead  of  an  8-cent  check  as  at  present. 
Therefore,  rather  than  take  your  time  unnecessarily,  I will 
ask  to  be  placed  on  record  in  behalf  of  the  Chelsea  Board  of 
Aldermen,  in  opposition  to  the  discontinuance  of  the  8-cent 


156 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


check,  and  in  favor  of  the  adoption  of  a 5-cent  fare  between 
Chelsea  and  Boston. 

Representative  David  J.  Maloney. 

I simply  want  to  express  my  approval  of  what  has  been 
said  by  the  previous  speakers  in  reference  to  the  Chelsea 
transportation.  It  is  unfortunate  that  there  is  not  some  con- 
solidation of  the  two  railroads.  If  you  go  to  the  Scollay  Square 
subway  to-night,  between  5 and  6 o’clock,  which  was  sup- 
posed to  be  built  originally  for  the  cars  of  the  Bay  State 
Street  Railway  Company,  you  would  probably  get  the  im- 
pression, if  you  were  a stranger,  that  Clarendon  Hill  was 
probably  the  capital  of  iMassachusetts.  If  you  wait  for  a 
Chelsea  car  you  will  see  eight  or  nine  of  the  Clarendon  Hill 
cars  come  along,  and  everything  else  except  a Chelsea  car, 
which  compels  the  citizens  of  Chelsea  to  take  advantage  of 
the  8-cent  check. 

I not  only  oppose  the  abolition  of  the  8-cent  check  for 
Chelsea,  but  I heartily  approve  either  a great  increase  in  our 
own  facilities,  or  a continuous  fare  throughout  Boston  for  5 
cents.  That  is  all. 

Laurence  F.  Quigley,  Esq. 

]Mr.  Chairman,  I wish  to  be  recorded  as  opposed  to  the 
abolition  of  the  8-cent  check,  and  in  so  doing  I know  that 
I voice  the  sentiments  of  a great  number  of  the  Chelsea 
people. 

Mr.  Beck.  I will  call  on  City  Solicitor  Andrew  A.  Cassasa, 
who  represents  the  city  of  Revere,  to  say  a word. 

Andrew  A.  Cassasa,  Esq. 

Mr.  Chairman  and  members  of  the  committee,  there  is  very 
little  that  I can  add  to  what  has  been  said  in  regard  to 
Chelsea.  We  are  in  the  same  position  in  Revere  as  Chelsea  is. 

There  is  just  this  one  thought  that  I wish  to  leave  with 
the  Commission,  — that  not  only  are  the  peo])le  of  Revere  inter- 
ested in  retaining  the  8-cent  check,  but  I believe  that  the 
vast  majority  of  people  in  Dorchester,  Roxbury  and  other 
outlying  districts  who  utilize  the  8-cent  check  to  Revere,  in 


1917.]  ' 


HOUSE  — No.  1875. 


157 


summer  would  suffer  a hardship  if  the  8-cent  check  was  taken 
away  from  them,  so  far  as  concerns  the  pleasure  and  con- 
venience of  their  family  and  children  going  to  and  from 
Revere  Beach. 

I feel  from  this  standpoint  as  well  as  our  own  that  the 
8-cent  privilege  should  not  be  abolished.  I know  that  the 
people  of  Revere  would  oppose  the  abolition  of  the  8-cent 
check  as  it  did  at  the  hearings  on  the  Bay  State  fare.  And 
my  city  goes  on  record  as  opposed  to  any  change  in  the  8- 
cent  check. 

We  know  nothing  about  the  financial  arrangements,  but 
we  hope  the  Commission  can  make  some  arrangement  which 
will  be  fair  to  the  Elevated,  and  continue  the  service  which 
we  now  have. 

Hon.  John  E.  Beck. 

That  practically  concludes  our  case,  but  I want  to  repeat 
what  I said  the  other  day,  that  Chelsea  occupies  a peculiar 
position  in  being  a part  of  the  metropolitan  district  and  yet 
is  the  only  one  that  is  compelled  to  pay  a 10-cent  fare  to 
reach  the  limits  of  Boston,  beyond  Scollay  Square. 

Now,  we  have  people  coming  here  in  reference  to  what 
little  there  is  left  of  the  old  8-cent  check.  We  are  handi- 
capped in  the  matter  of  that  check  also  for  often  the  con- 
ductor has  no  check,  and  you  have  to  pay  a 5-cent  fare. 
There  is  nothing  to  compel  them  to  carry  them,  on  our  lines, 
but  the  Bay  State  line  always  carries  them,  and  it  is  easy 
to  get  them.  So  I say  to  you  that  in  fairness  to  Chelsea 
and  Revere  nothing  should  be  done  that  would  entail,  a hard- 
ship upon  us  by  compelling  us  to  pay  a lO-cent  fare. 

I know  that  the  Transit  Commission  and  Public  Service 
Commission  are  aware  of  our  situation,  and  we  leave  our 
welfare  in  their  hands,  and  your  hands,  thanking  you  for 
your  kindness. 

Frederic  E.  Snow,  Esq. 

Commissioner  Macleod.  I should  like  to  ask  Mr  Snow 
a question  with  reference  to  these  8-cent  checks.  I notice 
in  your  argument  the  statement  is  made  that  the  company 
believes  it  has  the  right  to  discontinue  the  issue  of  these 


158 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


8-cent  checks,  but  that  that  right  has  been  questioned.  I 
wanted  to  inquire  whether  the  right  has  been  questioned  as 
to  the  discontinuance  of  these  8-cent  checks  as  between  the 
Boston  Elevated  and  the  Bay  State  Company,  whether  in  its 
judgment  there  is  anything  in  the  existing  law  that  would  in 
any  way  interfere  with  the  liberty  of  those  two  companies 
in  abolishing  the  8-cent  check  if  they  desired  to  do  so. 

Mr.  Snow.  I think  not.  My  own  opinion  is  that  there  is 
nothing  in  the  law  which  would  prevent  that.  Other  counsel 
in  connection  with  the  matter  gave  an  opinion  several  years 
ago  expressing  some  doubt  about  it,  and  that  is  what  is 
referred  to  in  dealing  with  the  question. 

Commissioner  Macleod.  I did  not  know  whether  that 
applied  to  the  8-cent  check  as  between  different  lines  of  the 
Boston  Elevated  Street  Railway  Company  itself,  or  in  con- 
nection with  — 

Mr.  Snow.  Oh,  no,  the  doubt  applied  in  the  written 
opinion  which  I have,  as  to  the  8-cent  check  between  the 
Boston  Elevated  and  the  Bay  State.  That  is  my  recollection 
of  it,  and  I shall  be  very  glad  to  furnish  you  with  a copy  of 
that  opinion. 

Commissioner  Macleod.  On  the  contention  made  in  that 
opinion,  was  it  the  belief  that  that  was  an  obligation  resting 
upon  both  companies? 

Mr  Snow.  My  recollection  is  that  that  opinion  was  to 
the  effect  that  the  Bay  State  was  under  no  obligation,  but 
that  the  Elevated  was,  and  that  the  obligation  rested  on  the 
Elevated  rather  than  the  Bay  State. 

Commissioner  Macleod.  So  that  if  that  theory  were  cor- 
rect, and  if  the  8-cent  check  were  retained,  it  is  conceivable 
that  the  Bay  State  might  insist  upon  getting  5 cents,  and  the 
Elevated  being  obliged  to  carry  the  ])assenger  for  3 cents? 

Mr.  Snow.  Yes. 

Commissioner  Macleod.  I am  interested  in  making  this 
inquiry  because  the  matter  of  the  8-cent  check  has  a double 
aspect  and  affects  the  situation  not  only  with  reference  to  the 
l^oston  Elevated  but  with  reference  to  the  Bay  State  Com- 
])any,  and  that  is  still  a moot  question,  so  far  as  the  Bay 
State  Com])any  is  concerned.  That  company  may  file  with 


1917.] 


HOUSE  — No.  1875. 


159 


the  Public  Service  Commission  some  tariff  proposing  the  can- 
cellation of  those  checks. 

Mr.  Snow.  I shall  be  very  glad  to  look  that  up  and  let 
you  have  a copy  of  it. 

Commissioner  Noyes.  I want  to  ask  Mr.  Snow  a question 
in  relation  to  Mr.  Bangs’  statement,  and  I am  sorry  Mr. 
Bangs  has  gone.  Do  you  believe  that  consciously  or  sub- 
consciously the  city  by  any  sort  of  magic  is  carrying  annually 
$450,000  of  the  subway  loan? 

Mr.  Snow.  No,  I do  not. 

Commissioner  Noyes.  Mr.  Bangs  in  his  statement,  or  the 
statement  which  he  read  to  this  Commission,  stated  that 
there  were  certain  by-products  of  the  subways,  so  to  speak, 
which  is  apt  to  happen  where  the  initiative  is  not  taken  or 
they  don’t  follow  out  a certain  line,  and  by  reason  of  varying 
plans  the  property  is  not  of  value  equal  to  the  cost.  But ' 
eliminating  that,  is  it  not  your  understanding  that  the  rental 
paid  by  the  Boston  Elevated  will  take  up  the  entire  subway 
loan?  It  is  in  theory,  of  course,  but  is  it  as  a matter  of 
fact? 

Mr.  Snow.  I understand  that  the  rental  of  the  Elevated 
not  only  pays  the  interest  on  the  investment  in  subways  but 
also  provides  an  amount  that  goes  into  the  sinking  fund.  I 
think  it  is  undoubtedly  true  that  that  fund  will  not  be  suffi- 
cient to  pay  off  the  bonds  at  maturity.  I think  that  Mr. 
Matthews’  statement  was  made  up  on  the  theory  that  it 
had  been  the  intention  to  accumulate  from  rentals  a sinking 
fund  sufficient  to  meet  the  bonds  at  maturity.  But  I don’t 
believe  anybody  really  expected  that  to  be  done.  Some  of 
the  bonds  will  mature  shortly.  It  has  not  been  expected  that 
the  subways  would  be  paid  for  in  twenty  years,  but  that  in 
forty  or  forty-five  years  the  rentals  would  be  sufficient  to 
pay  all  the  interest,  and  also  to  pay  off  the  bonds,  or  the 
renewals  thereof. 

At  the  end  of  forty  or  fifty  years  the  city  would  become 
possessed  of  the  subways  without  the  payment  of  a dollar, 
and  I think  that  is  the  way  it  will  work  out. 

I have  not  analyzed  Mr.  Matthews’  figures,  but  I think 
they  must  be  based  on  the  theory  that  the  sinking  fund  was 


160 


BOSTON  ELPIYATED  BAILWAY. 


[.War. 

to  retire  the  original  bonds  at  maturity,  which  was, not 
anticipated. 

Commissioner  Quincy.  Is  it  not  a fact  that  the  city  of 
Boston  has  always  raised  annually  an  amount  based  upon 
the  raising  year  by  year  ’of  the  requirements  in  order  that 
the  bonds  should  be  retired  at  maturity?  If  in  any  year  the 
rentals  received  from  the  Elevated  road  failed  to  provide 
a sufficient  fund,  that  the  city  of  Boston  assesses  the  deficit 
into  its  tax  levy? 

Mr.  Snow.  I have  not  so  understood  it.  I am  not 
familiar  with  the  city’s  financing,  but  I have  not  understood 
that  it  was  being  done.  I did  understand  that  on  the  Wash- 
ington Street  tunnel  for  a while,  and  even  now  I think  the 
annual  contribution  had  not  been  sufficient  to  pay  into  the 
sinking  fund  a sufficient  amount  for  the  retirement  of  the 
bonds  at  maturity. 

Commissioner  Quincy.  I think  you  will  find  that  my 
impression  is  right  in  that  respect,  that  the  city  of  Boston 
always  makes  the  payment  of  the  fund  for  that  purpose; 
that  the  city  of  Boston  relies  first  upon  getting  the  interest, 
and  secondly,  that  the  annual  contribution  to  the  sinking 
fund  shall  be  sufficient  to  provide  for  the  payment  of  the 
bonds  at  maturity. 

]\Ir.  Snow.  If  that  is  being  done,  it  is  quite  inconsistent 
with  the  negotiations  that  we  had  in  1911  when  the  subway 
leases  were  extended,  because  at  that  time  it  was  figured  out 
that  at  the  end  of  about  twenty-five  years  the  rental  would 
be  sufficient  to  retire  all  the  subway  bonds.  If  the  city  of 
Boston  was  providing  a sinking  fund  sufficient  to  pay  them 
at  maturity,  that  discussion  would  not  have  had  point. 

Commissioner  Quincy.  It  is  a matter  of  bookkeeping 
simply. 

Mr.  Snow.  Oh,  yes.  It  can  be  easily  ascertained. 

Commissioner  Eastman.  You  say  you  think  that  the 
l)resent  rentals  will  provide  a fund  to  ])ay  the  bonds  in 
forty  or  fifty  years.  Have  you  made  any  recent  investiga- 
tion of  that  sinking  fund  so  that  you  know  how  it  is  working 
out? 

Mr.  Snow.  No,  I have  not.  In  1911,  when  the  leases  for 


1917.] 


HOUSE  — No.  1875. 


161 


new  subways  were  made  and  other  leases  renewed,  we  made 
an  investigation  at  that  time,  and  we  made  certain  figures, 
w’hich  were  prepared  by  an  actuary  of  an  insurance  com- 
pany, showing  that  if  those  rentals  ran  forty  or  fifty  years, 
the  rentals  would  be  sufficient  to  pay  the  interest  and  pay 
off  the  bonds  at  that  time.  As  a matter  of  fact  the  Transit 
Commission  were  unwilling  to  agree  to  an  extension  of  lease 
as  long  as  we  asked  for.  So  that  the  leases  terminate  in 
1935  and  the  sinking  fund  will  not  be  sufficient  to  pay  off 
the  bonds  in  1935.  If  the  lease  had  been  made  for  so  long  a 
time  as  proposed  in  1911,  we  feel  sure  that  the  sinking  fund 
would  have  been  sufficient  to  pay  the  bonds  at  the  expiration 
of  the  leases. 

Commissioner  Eastman.  You  have  not  made  investiga- 
tion of  the  fund  since  1911? 

Mr.  Snow.  No. 

Commissioner  Quincy.  Doesn’t  that  depend  entirely  upon 
the  interest  the  city  has  to  pay  upon  its  bonds,  whether  it 
pays  3 per  cent  or  4 per  cent? 

Mr.  Snow.  Undoubtedly  it  makes  all  the  difference  in 
the  world.  You  would  have  1^  per  cent  to  go  into  the  sink- 
ing fund  in  one  case,  or  only  | per  cent  in  the  other. 

Commissioner  Eastman.  And  doesn’t  it  depend  somewhat 
on  the  interest  obtained  on  the  amount  already  in  the  sinking 
fund? 

Mr.  Snow.  Undoubtedly.  It  all  enters  into  it.  But  I 
have  not  had  occasion  to  enter  into  it  since  then.  It  is  true, 
however,  that  because  they  would  not  give  us  as  long  leases 
as  we  suggested,  the  rentals  will  not  pay  off  the  bonds  in 
1935. 

Commissioner  Eastman.  How  long  are  these  leases? 

Mr.  Snow.  They  all  expire  in  1935. 

Commissioner  EasTxMAN.  How  many  years?  Are  they  all 
the  same? 

Mr.  Snow.  No,  the  Tremont  Street  subway  was  leased 
originally  for  twenty  years  I think,  and  the  Washington 
Street  tunnel  I think  for  twenty-five  years.  The  East  Bos- 
ton tunnel  was  twenty-five  years  I think,  and  then  by  the 
Act  of  1911,  they  were  automatically  extended  so  that  the 
leases  of  all  the  subways  should  exjiire  in  1935. 


162  BOSTON  ELEVATED  RAILWAY.  [Mav, 

Commissioner  Stone.  Does  anybody  think  that  4|  per 
cent  is  going  to  pay  the  sinking  fund  in  1935? 

Mr.'  Snow.  I don’t  think  so. 

Commissioner  Stone.  They  ought  to  know  better  than 
that. 

Commissioner  Noyes.  There  was  no  such  expectation. 

Mr.  Snow.  I don’t  know  what  they  thought,  but  in  1897 
and  1898  the  city  of  Boston  got  money  much  cheaper  than 
it  does  to-day.  I think  some  of  the  East  Boston  tunnel 
bonds  were  sold  at  just  a trifle  over  3 per  cent,  if  I am  not 
mistaken. 

Commissioner  Eastman.  The  rental  of  the  Tremont  Street 
subway  was  more  than  4i  per  cent? 

Mr.  Snow.  4|  per  cent. 

Commissioner  Eastman.  With  the  toll  provision  also? 

Mr.  Snow.  With  the  toll  provision  besides. 

Commissioner  Eastman.  Isn’t  it  true  that  so  far  as  the 
East  Boston  tunnel  is  concerned  there  is  now  a direct  burden 
on  the  city? 

Mr.  Snow.  It  is  true  because  the  city  has  assumed  that 
1 cent  on  each  passenger.  The  city  is  paying  that  directly. 

Commissioner  Eastman.  Do  you  know  how  much  that 
amounts  to  a year? 

Mr.  Snow.  I cannot  tell  you;  no. 

Commissioner  Quincy.  Mr.  Snow,  Mr.  ^Matthews  in  his 
argument  assumed  that  if  the  State  or  a metropolitan  dis- 
trict created  for  the  purpose  should  purchase  the  Cambridge 
subway  for,  say,  $9,000,000,  that  that  amount  of  new  capital 
would  be  available  for  other  extensions  within  a few  years. 
Do  you  know  of  any  legal  objection  which  would  prevent 
such  application  of  the  money?  Would  the  stockholders  or 
bondholders  whose  money  went  into  the  Cambridge  subway 
have  any  rights  in  the  premises  as  to  substituting  one  form 
of  ])ro])erty  for  another? 

Mr.  Snow.  1 doji’t  know  why  they  should  have. 

Commissioner  Quincy.  The  stockholders  obviously  would 
not  have  any  such  right  in  the  matter.  I want  to  make  sure 
whether  there  were  bonds  outstanding. 

Mr.  Snow,  ddiere  were  no  bonds  issued  against  the 


1917.] 


HOUSE  — No.  1875. 


163 


Cambridge  subway.  That  was  paid  for  entirely  from  pro- 
ceeds of  stock. 

Commissioner  Quincy.  Then  it  is  correct  that  the  new 
capital  provided  to  the  Elevated,  if  such  a sale  was  made, 
would  be  available  for  proper  investment,  such  as  could  be 
charged  to  new  capital. 

Mr.  Snoav.  Yes,  and  it  undoubtedly  would  be  provided 
in  the  act  that  the  expenditure  of  any  proceeds  from  the  sale 
of  the  Cambridge  subway  should  be  subject  to  the  approval 
of  the  Public  Service  Commission  just  the  same  as  the  pro- 
ceeds from  the  issue  of  stock  or  bonds. 

Commissioner  Ellis.  And  certain  stock  would  be  out- 
standing wUich  represents  that  original  money  upon  which 
you  would  be  bound  according  to  your  views  to  pay  6 
per  cent? 

Mr.  Snow.  Yes,  this  Cambridge  subway  refunding  will 
not  give  us  immediate  relief  because  we  have  to  pay  not 
only  the  interest  on  the  stock  which  was  issued  to  pay  for  it, 
but  we  have  also  to  pay  the  4^  per  cent  additional  rental  for 
this  subway  which  we  would  no  longer  own,  and  against  this 
4^  per  cent  we  can  offset  any  interest  we  get  on  our  cash  in 
our  hands,  which  would  be  less  than  4 per  cent.  So  that  it 
does  not  help  our  immediate  future,  within  the  next  year. 

Commissioner  Eastman.  It  could  be  provided  that  if  the 
State  could  take  it  over,  that  the  payments  therefor  should 
be  made  in  installments  as  you  needed  the  money. 

Mr.  Snow.  I think  something  of  that  kind  could  be  done, 
but  the  question  would  arise  as  to  where  the  title  would  be, 
in  the  meantime.  But  I think  something  could  be  worked 
out  which  would  pay  us  the  money  as  we  needed  it,  which 
would  relieve  us  from  the  loss  of  interest. 

Commissioner  Eastman.  Is  it  true  that  the  entire 
89,000,000  for  the  Cambridge  subway  was  furnished  by  the 
sale  of  stock? 

Mr.  Snow.  The  entire  cost  of  the  Main  Street  tunnel,  as 
distinguished  from  the  Elliott  Square  terminal,  the  Elevated 
connection,  and  the  contribution  toward  the  cost  of  the 
bridge,  was  furnished  by  stock,  and  that  was  on  account  of 
the  provision  allowing  the  city  of  Cambridge  to  take  the 


164 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


tunnel,  which  provided  that  they  could  take  it  at  cost  plus 
7 per  cent  on  money  paid  in  by  stockholders,  less  dividends 
paid  in  the  meantime. 

Commissioner  Eastman.  The  S9,()()0,0()()  was  met  by  the 
sale  of  stock? 

]\Ir.  Snow.  I will  tell  you  in  a minute.  [Examines 
papers.]  The  subway  proper  is  only  $7,000,000,  and  that  is 
what  the  city  of  Cambridge  has  a right  to  take,  and  that  was 
paid  for  by  the  issue  of  stock. 

Commissioner  Eastman.  Is  that  what  you  are  proposing 
to  sell? 

Mr.  Snow.  Well,  we  have  left  that  indefinite.  Of  course 
what  we  would  like  to  sell,  if  we  are  to  sell  anything,  is  to 
sell  the  whole  thing,  which  amounts  to  $10,549,000. 

Commissioner  Eastman.  Does  that  include  the  car  house? 

Mr.  Snow.  The  Main  Street  tunnel  the  Elliott  Square 
terminal,  the  Elevated  connection  in  Boston  between  the 
Cambridge  Bridge  and  the  Beacon  Hill  tunnel,  and  the 
contribution  toward  the  cost  of  the  Cambridge  bridge.  I 
am  wrong  about  the  $10,000,000,  because  that  includes  the 
Beacon  Hill  tunnel.  But  exclusive  of  that  it  is  about 
$9,000,000. 

Commissioner  Eastman.  At  the  Elliott  Square  terminal 
you  have  a car  house? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  Is  that  included  in  the 
$9,000,000? 

Mr.  Snow.  Yes,  that  $9,000,000  includes  everything  ex- 
cept the  equipment.  That  includes  the  building  and  the 
land. 

Commissioner  Allen.  L^p  to  the  entrance  to  the  tunnel? 

Mr.  Snow.  Up  to  the  entrance  of  the  tunnel  under 
Beacon  Hill. 

Commissioner  Macleod.  I su])])ose  it  would  be  neither 
feasible  nor  good  financing  in  the  present  market  for  securi- 
ties to  use  any  of  the  proceeds  from  the  sale  of  this  tunnel 
for  the  retirement  of  any  outstanding  bonds.  I suppose  the 
new  bonds  j)laced  now  could  not  be'  placed  at  as  favorable  a 
rate  of  interest  as  bonds  now  outstanding. 


1917.] 


HOUSE  — No.  1875. 


165 


Mr.  Snow.  That  is  probably  true.  What  we  have  coft- 
sideredHn  connection  with  that  was  the  possibility  of  our 
being  allowed  to  retire  some  of  our  stock,  provided  it  could 
be  purchased  at  less  than  par.  Of  course  the  entire 
89,000,000  is  not  going  to  be  needed  for  perhaps  three  or 
four  years,  and  it  might  be  practicable  to  use  a portion  of 
that  for  that  purpose.  On  the  other  hand,  to  do  that  would 
require  a modification  of  the  general  law  which  requires  the 
amount  of  capital  outstanding  to  be  equal  to  the  bonds  out- 
standing, and  it  has  been  considered,  and  I am  not  at  all 
sure  whether  we  should  recommend  it  as  part  of  any  legisla- 
tion or  not;  but  I don’t  think  it  would  be  desirable  to  re- 
tire bonds  because  we  should  shortly  have  to  get  more 
money,  and  it  would  cost  more  in  the  end,  I think. 

Commissioner  Macleod.  New  bonds  could  not  be  placed 
on  as  favorable  conditions  probably  as  the  bonds  which  are 
now  outstanding? 

Mr.  Snow.  I think  not. 

Commissioner  Quincy.  Then  it  is  a fact,  as  I understand 
it,  that  until  such  time  as  the  money  received  from  the  sale 
of  the  Cambridge  subway  or  the  Elevated  is  invested  in  such 
other  manner  as  would  produce  a corresponding  income  to 
the  Elevated  Railroad,  instead  of  your  finances  being  re- 
lieved they  would  be  burdened  by  the  per  cent  rental 
which  you  would  have  to  pay. 

Mr.  Snow.  They  would  be  burdened  to  that  extent,  less 
the  interest  that  we  could  get  for  the  money  on  hand,  unless 
we  got  payments  in  installments. 

Commissioner  Qui^X'y.  Would  not  the  ideal  arrangement 
be  to  provide  that  this  title  should  be  held  in  such  manner 
as  would  protect  both  parties  to  the  transaction,  and  that 
the  money  would  be  paid  to  you  only  as  you  may  want  it  for 
capital  expenditures  approved  by  both  yourselves  and  the 
Public  Service  Commission? 

Mr.  Snow.  Personally  such  an  arrangement  would  have 
to  be  made,  I think,  because  otherwise  it  would  impose  an 
undue  burden  on  the  road. 

Commissioner  Noyes.  Reference  has  been  made  to  pos- 
sible sale  of  property  in  Cambridge  which  is  not  of  use. 


166 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Have  you  any  such  property?  I think  some  one  of  the 
representatives  from  Cambridge  spoke  of  that. 

Mr.  Snow.  I cannot  tell  you  from  recollection  where  it 
is  situated,  but  it  is  true  that  there  is  more  or  less  real 
estate,  particularly  that  which  belonged  to  the  West  End, 
which  could  be  sold,  and  if  the  Commission  agrees  to  con- 
sider it,  we  are  prepared.  I have  prepared  and  shall  be 
glad  to  furnish  a schedule  to  the  Commission  of  all  real 
estate  which  by  any  possibility  might  be  sold,  and  what  it 
stands  on  the  books  at,  and  the  situation  with  reference  to  a 
sale. 

Commissioner  Noyes.  Would  it  be  fair,  Mr.  Chairman, 
to  have  him  submit  that  before  we  decide  whether  we  shall 
consider  it? 

Mr.  Snow.  We  shall  be  very  glad  to  submit  the  schedule. 

The  Lieutenant-Governor.  That  is  shown,  I suppose,  in 
each  of  your  annual  reports? 

Mr.  Snow.  No,  not  in  detail.  This  schedule  will  give 
a statement  of  what  it  is,  where  it  is  and  what  it  stands  at 
on  the  books,  and  its  assessed  value. 

Commissioner  Eastman.  It  stands  on  the  books  at  about 
$1,200,000,  don’t  it? 

Mr.  Snow.  You  are  referring  to  the  real  estate  bought 
from  the  West  End,  are  you  not? 

Commissioner  Eastman.  And  the  smaller  items  owned  by 
yourself? 

Mr.  Snow.  I could  not  say  exactly  what  it  is,  but  I 
understand  it  is  very  close  to  the  correct  amount. 

The  Lieutenant-Governor.  Are  there  any  questions? 
That  is  all,  Mr.  Snow. 

Mr.  Clement  G.  Morgan  of  Cambridge. 

I want  to  ask  a question.  I notice,  IMr.  Snow,  your  dis- 
tinction between  Cambridge  subway  proper  and  the  Elliott 
Square  terminal,  and  I wanted  to  ask  if  the  suggestion  on 
page  51,  item  6,  “purchase  of  the  Cambridge  subway  by  the 
State,  and  its  rental  to  the  company,”  — I wanted  to  ask 
whether  it  included  the  Elliott  Square  terminal  and  tiie 
other  improvements  mentioned  on  page  70,  with  the  excep- 


1917.] 


HOUSE  — No.  1875. 


167 


tion  of  the  Beacon  Hill  turnout.  I mean,  the  part  of  the 
tunnel  that  it  is  desired  to  have  purchased  by  the  State 
includes  everything  except  the  Beacon  Hill  tunnel  in  Boston, 
or  what  is  included  in  that,  anyway? 

Mr.  Snow.  That  question  was  already  asked  me  by  the 
Commission,  and  I said  of  course  that  we  would  prefer,  if  we 
were  to  sell  anything,  to  sell  the  whole,  including  the  Elliott 
Square  terminal.  Perhaps  the  State  would  not  want  to  buy 
the  whole,  and  we  have  left  it  in  such  a way  that  the  bill 
could  be  drawn  covering  the.  whole  or  a part. 

Mr.  Morgan.  That  does  not  answer  my  question.  What 
is  included  in  the  suggestion  of  the  Elevated  road  made  on 
page  51? 

Mr.  Snow.  Well,  it  may  include  either  the  Main  Street 
subway  alone,  or  it  may  include  the  Elliott  Square  terminal, 
and  it  may  include  the  Elevated  connection.  That  is  for  the 
Commission  to  decide,  as  to  what  should  be  included. 

Mr.  Morgan.  Then,  Mr.  Chairman,  if  I understand  Mr. 
Snow’s  answer  to  my  question,  there  is  nothing  positively 
definite  in  that  section  on  page  51,  as  to  what  the  road  wants 
the  city  of  Cambridge  or  the  State  of  Massachusetts  to  pur- 
chase. 

Mr.  Snow.  That  is  perfectly  true. 


George  A.  Flynn,  Esq.,  Assistant  Corporation  Counsel,  City  of 

Boston. 

In  order  to  form,  my  own  impression  as  to  the  question  of 
whether  or  not  any  deficit  in  the  sinking  fund  was  raised  by 
tax  levy,  I have  just  telephoned  to  the  city  auditor,  Mr. 
Mitchell,  and  he  informs  me  that  that  is  not  done.  The 
Transit  Commission  is  separate  and  distinct  from  the  city 
loans.  The  city  loans  are  raised  now  by  serial  bonds  and 
the  rapid  transit  loans  are  not  issued  in  serial  form,  and 
the  tax  levy  does  not  contain  any  item  to  make  up  any 
deficit  in  the  Transit  Commission  loans.  There  is  no  annual 
charge  on  the  taxpayer  of  Boston  for  the  purpose  of  es- 
tablishing a sinking  fund  annually  sufficient  to  meet  the 
payment  of  the  bonds  at  the  maturity  of  the  leases. 


168 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 

Commissioner  Stone.  Then  it  is  a perfectly  correct 
statement  that  the  Boston  subways  do  not  cost  the  Boston 
residents  anything,  and  that  there  is  a sinking  fund  which 
in  time  will  retire  them. 

Mr.  Elynn.  Yes,  there  is  a sinking  fund  in  existence 
which  it  is  expected  will  cancel  all  the  outstanding  indebted- 
ness of  the  city  incurred  under  the  rapid  transit  loan,  so- 
called.  The  figures  presented  by  Mr.  Matthews  are  new; 
they  contain  a new  thought  to  me,  namely,  that  the  city  has 
in  effect  relieved  the  Boston  Elevated  Railway  Company 
from  taxes,  on  an  amount  equal  to  the  cost  of  the  tunnel. 
. I never  heard  that  advanced  before,  and  my  understanding 
is  that  our  Supreme  Court  has  said  that  the  tunnel  is  in 
effect  a public  way,  and  we  have  never  had  to  pay  any- 
thing, of  course,  for  the  use  of  the  streets  in  which  the  tunnels 
have  been  constructed.  It  is  not  considered  an  additional 
servitude  but  as  an  additional  means  of  travel.  And  I don’t 
know  quite  what  to  say  in  answer  to  that  suggestion  of  Mr. 
Matthews,  but  I know  it  is  a new  phase  of  it 

Commissioner  Allen.  Cambridge  gets  $15,000  a year  in 
taxes. 

Mr.  I'lynn.  That  is  because  it  is  their  property.  But  the 
tunnels  in  Boston  belong  to  the  municipality  in  its  official 
capacity.  As  a matter  of  fact  they  get  no  tax  on  the  sub- 
way, Mr.  Snow  says,  and  it  is  outside  real  estate  which  is 
taxed. 

Commissioner  Ellis.  Cambridge  gets  no  tax  on  the  sub- 
way? 

Mr.  Elynn.  No. 

Commissioner  Macleod.  Not  on  the  $7,000,000  of  prop- 
erty? 

Mr.  PTynn.  Not  anything  on  the  subway. 

Commissioner  Eastman.  Do  you  think  that  is  right,  Mr. 
Snow,  that  the  corporation  franchise  tax  should  be  assessed 
on  money  invested  in  the  subway? 

Mr.  Snow.  The  corporate  franchise  tax  is  a tax  on  the 
market  value  of  the  capital  stock,  less  certain  deductions. 
That  includes  all  the  ca])it{d  stock  of  the  com])any,  including 
tliis  which  is  in  the  subway. 


1917.] 


HOUSE  — No.  1875. 


169 


Commissioner  Eastma>j'.  If  the  State  should  take  over 
the  subway,  wouldn’t  you  include  the  subway  in  fixing  the 
assessments? 

Mr.  Snow.  On  the  start.  Of  course  the  subway  part  of 
that  tax  on  the  stock  really  goes  to  the  city  of  Boston,  and 
not  to  Cambridge,  because  of  the  location  of  the  Cambridge 
subway. 

Commissioner  Eastman.  Cambridge  gets  it  back?  , 

Mr.  Snow.  It  gets  its  portion. 

Commissioner  Eastman.  And  if  the  subways  in  Boston 
had  been  built  by  the  company  instead  of  by  the  city,  the 
taxes  paid  by  the  company  would  have  been  correspondingly 
increased? 

Mr.  Snow.  Yes,  because  they  would  have  had  to  issue 
more  capital  and  pay  more  tax  on  the  capital. 

John  F.  Duffy,  Esq. 

Mr.  Chairman,  I heard  you  read  out  if  any  one  was  here 
from  the  United  Improvement  Association.  I am  a delegate 
to  the  United  Improvement  Association  from  the  fact  that  I 
am  past  president  of  the  Mattapan  Improvement  Association, 
of  which  I was  president  for  five  years,  two  years  of  which  I 
was  on  the  executive  committee  of  the  United  Improvement 
Association. 

Now,  I am  not  representing  the  United  Improvement 
Association.  I saw  an  article  in  this  morning’s  paper,  I 
think.it  was  in  the  “Post,”  signed  by  the  president  of  the 
United  Improvement  Association  on  the  matter  before  the 
committee  this  morning.  But,  as  interested  in  civic  advance 
in  the  city  and  giving  some  time  to  the  question  of  transpor- 
tation, — for  three  years  I put  in  a tunnel  bill  for  a tunnel 
from  Dudley  Street  to  Grove  Hall,  for  Dorchester,  and  last 
year,  at  the  request  of  the  majority  of  the  Improvement 
Associations  of  Dorchester,  I drafted  a bill  for  a tunnel  under 
Harrison  Avenue  from  Essex  Street  under  Dudley  Street  to 
Grove  Hall,  — I would  like  to  speak  on  this  question  of  the 
Boston  Elevated  Railway  Company. 

I have  gone  over  the  salary  that  is  filed  under  oath  with 
the  Public  Service  Commission  annually, — that  is,  of  salaries 


170 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


over  $6,000,  — and  I find  the  president  gets  $25,000.  That  is, 
for  this  year;  and  the  last  year  Mr.  Bancroft  got  $35,000. 
Besides  that  he  got  $1,500  for  attending  committee  meetings, 
or  in  all  $36,500.  This  year  I understand,  although  it  is 
not  on  the  list,  because  Mr.  Brush  has  been  since  made 
president  — but  the  commissioners,  somebody  in  the  office, 
told  me  that  Mr.  Brush’s  salary  this  year  is  $25,000.  With 
$1,500  for  attending  committee  meetings,  that  makes  $26,500. 

The  vice-president  gets  $20,000,  and  the  chairman  of  the 
executive  committee  $25,000.  There  is  $71,000  in  overhead 
salaries. 

This  year  Gaston,  Snow  & Saltonstall,  general  attorneys  — 
I don’t  find  the  return,  but  last  year  they  received  $78,000. 
Mr.  Sears,  Attorney  Sears,  gets  $15,000.  That  is  $93,000. 
John  A.  Sullivan,  corporation  counsel  of  Boston,  gets  $9,000. 

Mr.  Neal,  the  auditor,  gets  $10,000.  Mr.  Mitchell,  the 
auditor  of  the  city  of  Boston,  one  of  the  best  auditors  in 
the  country,  only  gets  $6,000. 

The  Elevated  last  year,  on  transportation,  took  in,  in 
round  numbers,  $17,000,000.  This  year  they  took  in,  in 
transportation,  $18,000,000  — a million  more.  The  cost  of 
transportation  — the  expense  — was  $12,000,000.  There  is  a 
profit  of  $6,000,000. 

Now,  the  service  we  are  getting  in  Boston  is  something 
awful.  I don’t  think  that  when  Mayor  Curley  made  the 
statement  that  he  would  lower  the  taxes  to  help  the  Elevated 
out,  that  he  has  made  a favorable  impression,  or  that  the 
people  of  Boston  back  him  up  in  that. 

I went  through  the  assessor’s  office  on  the  vacant  land, 
not  buildings,  that  the  Elevated  has  in  the  city  of  Boston, 
and  they  have  got  12,236,200  square  feet  of  idle  land.  That 
is  not  counting  in  the  old  car  stable  on  Sixth  Street,  South 
Boston,  and  that  could  be  sold.  They  have  no  use  for  it. 
But  this  vacant  land  is  in  West  Roxbury,  and  out  in  Matta- 
pan  they  have  a big  lot  at  Lauriat  Street,  or  Woodrow 
Avenue  now,  which  is  fenced  in  with  these  disgusting  sign- 
boards, and  all  that  land  is  lying  there  and  will  never  be 
used  so  far  as  I can  see,  and  the  city  of  Boston  is  paying 
the  taxes  on  that  through  transportation. 


1917.] 


HOUSE  — No.  1875. 


171 


The  city  has  paid,  as  I understand  in  drafting  my  tunnel 
bills,  — bonds  were  issued  and  the  city  paid  4 per  cent 
annually  on  the  bonds  issued  for  the  tunnel.  And  the  in- 
come is  per  cent,  the  rental.  At  that  rate  it  should  take 
the  city,  to  pay  the  interest  and  the  principal,  making  only 
I per  cent  a year,  it  should  take  it  fifty  or  sixty  years  before 
they  would  have  the  tunnels  paid  for.  The  city  has  already 
paid,  and  I looked  at  the  city  auditor’s  account,  in  four 
years,  $6,000,000,  or  $36,000,000  on  the  principal  of  the  sub- 
way bonds,  and  there  is  $28,000,000  principal  debt  yet  to  be 
paid. 

Commissioner  Noyes.  You  don’t  mean  just  that,  do  you? 
Will  you  repeat  that  again? 

Mr.  Duffy.  In  looking  through  the  city  auditor’s  report 
of  1916,  I find  that  in  payments  on  principal  the  last  four 
years,  — no,  the  last  six  years,  — that  they  were  $6,000,000 
annually. 

Commissioner  Noyes.  You  mean  that  bonds  have  been 
issued  to  that  extent? 

Mr.  Duffy.  No,  paid  on  the  debt. 

Commissioner  Noyes.  On  the  subway  debt? 

Mr.  Duffy.  On  the  subway  debt,  the  city  of  Boston  has 
paid  $36,000,000  on  the  principal. 

Commissioner  Noyes.  I think  there  is  something  wrong 
there. 

Mr.  Duffy.  And  that  there  is  still  $28,000,000  due  on 
the  principal  that  the  city  has  got  to  pay. 

. Commissioner  Noyes.  You  must  be  in  error  there. 

Mr.  Flynn.  I think  that  the  fact  to  which  Mr.  Duffy  has 
reference  is  that  the  bonded  expenditures  were  about 
$36,000,000.  I understood,  roughly  speaking,  that  there  were 
about  $35,000,000,  and  that  there  were  in  the  hands  of  the 
Sinking  Fund  Commission  bonds  to  the  amount  of  about 
$36,000,000.  So  that  there  are  outstanding  bonds  to  the 
amount  of  about  $28,000,000,  but  the  city  of  Boston’s  gross 
expenditures  are  about  $35,000,000. 

Mr.  Duffy.  Well,  I got  the  auditor’s  report  for  this 
year.  I have  not  got  it  with  me,  but  I am  pretty  sure  when 
I went  over  the  question  of  what  the  debt  is,  the  rapid 


172 


BOSTON  ELE^\\TEI)  RAILWAY. 


[^lar. 

transit  debt  and  what  has  been  paid,  that  those  were  the 
figures  that  I got.  Of  course,  I do  not  pretend  — I am 
practicing  law  and  I do  not  pretend  to  be  any  financier,  but 
I think  that  if  the  Elevated  were  given  back  the  $500,000, 
and  I don’t  see  why  they  should  not  be  given  back  that 
$500,000,  that  if  the  overhead  expense  — the  Elevated  on 
their  own  statement  admits  that  they  lost  a million  dollars 
on  that  track  in  1912.  I know  I paid  to  conductors  fares 
and  they  put  them  in  their  pocket  and  they  never  rang  them 
up.  It  cost  them  $400,000  for  that  arbitration.  As  I under- 
stand it,  Mr.  Storrow  refused  to  accept  his  $30,000. 

The  city  of  Boston  has  spent  hundreds  of  thousands  on  the 
Aquarium,  Marine  Park,  and  on  the  Zoo  at  Franklin  Park. 
They  have  had  one  of  the  best  years  of  transportation  they 
ever  had.  They  had  the  National  League,  World  Series 
Games,  they  have  got  Billy  Sunday,  they  have  got  the 
x\quarium  and  the  Zoo.  [Laughter.] 

Now,  I wanted  to  say  that  I am  sorry  the  city  of  Cam- 
bridge ever  let  the  Boston  Elevated  build  the  tunnel.  But  of 
course  I had  the  impression  that  their  finances  were  such  that 
they  coidd  not  tackle  the  problem.  But  when  my  bill  was 
being  heard  before  the  committee  this  year,  a statement  was 
made,  I don’t  know  whether  by  Judge  Sullivan  or  by  Lewen- 
berg,  who  is  now  on  the  Gas  and  Electric  Light  Commission, 
speaking  for  my  tunnel  bill,  — that  the  tunnel  out  Harrison 
Avenue,  that  there  was  a plan  in  the  Rapid  Transit  Com- 
mission, and  that  that  tunnel  was  figured  to  cost  $7,000,000, 
and  that  that  tunnel  was  300  yards  longer  than  the  Cam- 
bridge subway,  which  cost  $9,000,000. 

Now,  it  seems  to  me  that  if  tlie  city  of  Boston  could  build 
a tunnel  that  long  for  $7,000,000,  that  if  the  city  of  Cam- 
bridge had  taken  hold  of  that  proposition  they  might  have 
saved  a million  or  two  of  money. 

Now,  I think  that  tlie  transportation  we  are  getting  in 
Boston  — I have  not  got  it  here  but  I think  in  tlieir  state- 
ment filed  for  new  equipment  that  they  want  that  all  for 
snow  })lows  and  snow  sleighs,  and  I want  to  say  this,  that  in 
the  last  couple  of  years  two  coiuhictors  carry  as  many  pas- 
sengers as  four  conductors  did  before,  so  that  they  are  carry- 


1917.] 


HOUSE  — No.  1875. 


173 


ing  more  passengers  and  cheaper  than  they  ever  did.  And 
we  have  got  a lot  of  old  truck  that  is  not  fit  to  be  run  in  the 
city  of  Boston,  and  the  conditions  on  our  trains  are  intoler- 
able, unsanitary  and  dangerous.  We  are  packed  in  worse 
than  animals  are  packed  on  cars,  and  people  are  injured  and 
hurt  and  everything.  And  I think  that  the  people  of  Boston 
should  not  be  burdened  any  more  in  helping  the  Elevated; 
that  they  are  not  getting  the  transportation  that  they 
deserve. 

I think  that  if  the  $500,000  were  paid  back,  1 don’t  see 
why  the  city  should  allow  it  any  abatement  on  the  rentals  of 
the  tunnels.  That  has  got  to  take  care  of  that  debt.  The 
4^  per  cent  rentals,  with  the  interest  at  4 per  cent,  paid 
toward  the  debt  of  the  rapid  transit  bonds,  is  low  enough,  and 
I think  that  any  suggestion  that  was  niade  by  any  one  rep- 
resenting the  city  of  Boston,  that  the  city  would  be  willing  to 
allow  the  abatement  on  the  rentals,  or  that  they  would  lower 
the  taxes  of  the  city  of  Boston  for  the  sake  of  the  Elevated, 
if  it  ever  comes  to  the  vote  of  the  people,  they  will  not  be 
backed  up  on  that  proposition. 

Mr.  Flynn.  May  I interrupt  again?  I have  attended  the 
last  two  hearings  representing  the  city  of  Boston,  and  it 
seems  that  the  Mayor  is  misquoted  and  misunderstood  as  to 
the  statement  made  before  this  Commission.  I read  the 
statement  in  the  City  Record  last  week  and  he  was  very 
careful  to  preface  his  remarks,  in  relation  to  the  reduction  of 
taxes  of  the  Elevated,  to  the  city  of  Boston  with  the  specific 
provision  that  he  did  not  recommend  that  unless  all  other 
means  of  relief  failed,  and  unless  in  the  first  instance  this 
Commission  or  sorne  other  body  acting  for  it  had  made  an 
extended  examination  of  the  finances  of  the  Boston  Elevated 
and  come  to  the  conclusion  that  the  present  condition  was  in 
no  way  due  to  mismanagement,  either  by  extravagance  or 
lack  of  oversight,  and  that  unless  there  was  a specific  find- 
ing by  this  Commission  that  the  condition  was  not  due  to 
extravagance  or  mismanagement,  he  made  no  recommenda- 
tion. 

He  recommended  a reduction  of  the  taxes  to  the  Elevated, 
not  within  the  limits  of  Ihiston  exclusively,  but  to  cover  the 


174 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


entire  area,  all  the  communities  served  by  this  corporation, 
and  that  is  only  as  an  alternative  to  an  increase  in  fares. 
He  said  that  he  believed  as  between  the  two  bills  it  was 
fairer  to  everybody  concerned  to  have  a reduction  in  taxes 
over  the  entire  metropolitan  district  served  by  the  Boston 
Elevated  rather  than  an  increase  in  fares,  and  that  he  felt 
the  people  would  back  him  up  in  that.  But  if  the  Commis- 
sion is  able  to  find  any  other  remedy,  he  believes  neither  of 
those  things  should  be  done,  and  that  only  in  the  last  ditch 
should  this  Commission  or  any  other  body  which  treats  this 
subject  recommend  a reduction  in  J:axes  to  the  Boston 
Elevated. 

I know  it  is  clear  to  the  Commission,  and  I think  it  ought 
to  be  made  clear,  in  fairness  to  the  Mayor,  to  all  the  com- 
munity who  are  so  deeply  interested  in  this  question. 

Commissioner  Quincy.  Mr.  Flynn,  I want  you  to  help  us 
clear  up  briefly  this  loan  situation  by  the  city.  Is  it  not 
a fact  that  it  is  the  established  policy  of  the  city  of  Boston 
to  reserve  annually  a certain  amount  in  the  sinking  fund 
which  at  maturity  will  be  used  to  pay  the  loan,  so  that  when 
the  loan  matures  provision  will  have  been  made  for  paying  it 
in  full,  and  there  will  be  no  necessity  of  renewing  any  part  of 
that  loan  in  place  of  the  old  one? 

]\Jr.  Flynn.  That  is  true,  ]\Ir.  Quincy,  in  all  cases  except 
the  rapid  transit  loan,  and  there  is  specific  approval,  I 
think,  by  legislation  for  that.  I cannot  refer  to  the  statute 
at  this  moment.  jMr.  Duffy’s  statement  is  in  part  correct. 
The  rental  of  the  tunnels  is  4|  per  cent,  except  in  the  case 
of  the  Tremont  Street,  where  it  is  4j.  And  then  the  city  of 
Boston  has  obtained  premiums  from  the  sale  of  the  rapid 
transit  bonds,  which  were  added  to  the  sinking  fund,  so  that 
we  did  in  that  way  get  more  than  the  difference  between  4 
and  4§  per  cent. 

Commissioner  Quincy.  1 will  ask  ]\Ir.  Flynn  if  he  will 
kindly  furnish  the  Commission  with  a financial  statement 
showing  all  subway  loans  outstanding,  the  length,  and  show- 
ing also  the  provision  which  has  been  made  for  the  sinking 
fund. 

Mr.  Flynn.  I shall  be  very  glad  to  do  that. 


1917.] 


HOUSE  — No.  1875. 


175 


Commissioner  Quincy.  Of  course,  it  is  a fact,  isn’t  it, 
that  the  adequacy  of  the  sinking  fund  depends  on  the  ques- 
tion of  the  rate  at  which  the  city  can  invest  its  sinking  fund 
from  year  to  year? 

Mr.  Flynn.  Yes,  sir. 

Commissioner  Quincy.  But  is  this  not  also  the  fact, 
that  it  has  never  been  considered  essential  to  provide  for  the 
payment  of  a loan  within  the  period  of  a lease?  In  other 
words,  that  the  financial  arrangements  of  the  city  of  Boston 
do  not  require  that  a loan  should  be  paid  out  within  the 
period  for  which  the  subways  are  leased? 

Mr.  Flynn.  I never  heard  that  it  was. 

Comimissioner  Allen.  The  bonds  are  not  issued  for  the 
same  term  as  the  lease,  anyway,  are  they? 

Mr.  Flynn.  No.  The  bonds  are  generally  for  forty  years, 
and  the  lease  for  twenty  or  twenty-five  years.  All  the  leases 
were  brought  forward  to  terminate  at  a given  date. 

Commissioner  Quincy.  Does  not  that  lead  to  this  con- 
clusion, that  the  method  of  providing  for  the  meeting  of  the 
sinking  fund,  to  say  nothing  of  interest,  after  the  present 
leases  have  expired,  must  be  hypothetical  — must  assume  a 
continuance  of  the  lease  at  the  present  rentals,  or,  barring 
that,  that  the  city  takes  the  risk  of  the  disposition  that  can 
be  made  of  the  property,  to  pay  the  bonds? 

Mr.  Flynn.  That  is  the  reason,  Mr.  Quincy,  that  the 
leases  were  all  made  to  terminate  at  one  date,  so  that  they 
would  not  have  one  unprofitable  piece  of  tunnel  at  the  end, 
of  which  it  would  be  said,  “We  don’t  want  that  piece  be- 
cause it  is  of  no  use  to  us  in  itself.” 

Mr.  Walter  L.  Cramer. 

Mr,  Chairman,  in  any  adquate  settlement  of  transportation 
facilities  that  you  may  recommend,  I want  to  ask  your  con- 
sideration of  the  following  propositions — some  of  them 
perhaps  trite,  and  rather  self-evident,  but  all  of  them  I 
believe  fundamental: 

First,  that  the  lines  of  this  Boston  Elevated  Railway 
Company  are  public  highways.  Second,  that  public  high- 
ways as  such  are  not  proper  subjects  for  taxation.  Third, 


176 


BOSTON  ELEVATED  RAILWAY. 


[]\Iar. 


that  the  exclusive  right  or  franchise  of  the  Boston  Elevated 
Street  Railway  Company  to  operate  certain  of  our  highways 
is  a proper  subject  of  taxation  only  Avhen  that  right  has 
value.  Fourth,  that  the  facts  whether  that  right  has  value 
or  not  should  be  continually  determined  by  strict  and  search- 
ing public  control  and  supervision,  to  the  end  that  the 
expenses  of  maintenance  and  of  management,  which  have 
been  alluded  to  here  as  excessive,  be  properly  restricted 
and  not  used  to  cover  up  real  franchise  values.  Fifth, 
that  if  this  exclusive  right  or  franchise  should  be  shown 
by  such  public  supervision  to  be  of  no  value,  no  taxa- 
tion of  any  kind  should  be  levied  on  the  property  of  the 
Boston  Elevated  Railroad  that  they  are  using  for  transpor- 
tation purposes.  Sixth,  that  the  real  estate  values  brought 
into  being  by  any  public  highway  are  a fit  subject  of  especial 
betterment  taxes  by  the  community. 

Now,  if  these  propositions  seem  reasonable  to  you,  I would 
suggest  that  neither  the  rates  of  fare  nor  privileges  of  the 
public  be  changed,  until  — 

First,  proper  public  supervision  is  had  over  the  finances 
of  the  company; 

Second,  that  taxation  is  restricted  to  real  franchise  values; 
and. 

Third,  that  betterment  taxes  be  assessed  on  the  real 
estate  values  brought  into  being  by  the  operation  of  this 
public  utility. 

I would  remind  you,  gentlemen,  that  damages  are  usually 
awarded  when  public  highways  injure  adjacent  property.  Is 
not  the  obligation  to  pay  betterments  when  they  exist  just 
as  great  as  the  right  to  receive  damages? 

It  .seems  to  me  that  that  question  and  the  increase  of  real 
estate  values  by  the  development  of  public  utilities,  as  fur- 
nishing a means  for  levying  increased  taxes,  betterment 
taxes,  have  never  been  properly  gone  into  in  this  State. 

I want  to  say  one  more  thing  in  conclu.sion.  I think  that 
every  public  service  corj)oration  should  be  absolutely  re- 
stricted in  its  investments  in  ])ro])erty  which  it  uses  for 
public  .service  ])urposes.  As  I understand  some  of  the 


1917.] 


HOUSE  — No.  1875. 


177 


speakers  here,  the  Boston  Elevated  has  a lot  of  property 
which  they  don’t  use  for  transportation  purposes.  They 
should  not  be  allowed  to  hold  it. 

I have  also  had  it  intimated  to  me  — I don’t  know  how 
much  truth  there  is  in  it,  and  I hope  there  is  none  — that 
the  Boston  Elevated  are  large  owners  in  the  stock  of  the  Bay 
State  Street  Railway  Company.  I don’t  believe  that  one 
public  service  corporation  should  be  allowed  to  own  stock  in 
another.  That  is  all. 

Mr:  Snow.  Of  course,  Mr.  Chairman,  the  Boston  Ele- 
vated does  not  own  any  stock  in  the  Bay  State. 

Mr.  Cramer.  I purposely  said  I did  mot  know  whether 
that  was  the  fact  or  not.  I have  been  told  that  it  was. 

Mr.  Flynn.  Can  I put  into  the  record  a statement  from 
the  report  of  the  city  auditor  for  the  year  February  1,  1915, 
ending  January  31,  1916,  page  9,  under  the  heading  City  and 
County  Funded  Debt? 

Rapid  transit  debt : — 

Gross  debt, $31,906,700  00 

Sinking  fund, 3,778,986  17 

Net  debt, $28,127,713  83 


Senator  Bates.  Then  Mr.  Duffy  must  have  meant 
$600,000  instead  of  $36,000,000. 

Commissioner  Allen.  Mr.  Brush,  is  there  any  known 
objection  on  the  part  of  the  corporation  to  disposing  of  the 
property  which  it  does  not  use,  other  than  waiting  to  get  a 
proper  price  for  it? 

Mr.  Matthew  C.  Brush,  President. 

It  is  assumed  that  when  any  pro])erty  which  the  company 
owns  or  purchases  for  transportation  purposes,  due  to  the 
development  of  the  system  of  transportation,  becomes  unneces- 
sary for  transportation,  the  company  would  be  glad  to  sell  it, 
but  it  would  be  impossible  to  sell  it  at  a substantial  loss 
because  there  is  nothing  to  charge  it  to. 

Commissioner  Quincy.  Do  I understand  you,  Mr.  Brush, 


178 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


that  if  the  company  has  originally  paid  S50,000  for  a piece  of 
property,  there  would  be  no  means  of  selling  it,  no  authority 
of  law,  to  sell  it  for  825,000? 

]\Tr.  Brush.  Plenty  of  authority  of  law,  but  to  what  will 
we  be  permitted  to  charge  the  loss? 

Commissioner  Macleod.  Charge  it  to  profit  and  loss. 

Mr.  Brush.  We  are  shy  on  the  first  term. 

Senator  Bates.  Suppose  you  sell  it  for  860,000,  when  you 
paid  850,000? 

]\Ir.  Brush.  I suppose  you  would  credit  it  to  the  same 
account. 

Commissioner  Quincy.  Is  it  the  policy  of  the  road  never 
to  sell  a piece  of  real  estate  unless  it  can  get  the  cost? 

Mr.  Brush.  The  coinpany  is  not  in  position  at  the 
present  time  to  sell  real  estate  at  less  than  it  cost  it,  because 
it  has  nothing  to  which  it  can  charge  that  loss.  It  would 
have  to  be  immediately  charged  off.  Vs'e  would  have  no 
option  in  it. 

Commissioner  Quincy.  You  would  have  to  charge  it  to 
revenue. 

Mr.  Brush..  It  would  be  an  operating  charge  Lr  that 
month,  and  as  a new  executive  of  the  company,  I am  not 
anxious  to  absorb  any  840,000  or  850,000  losses  in  one 
month. 

Commissioner  Eastman.  Do  you  mean  that  the  loss  of  that 
would  be  an  operating  expense? 

iVIr.  Brush.  I understand  so. 

Commissioner  Eastman.  Can  you  and  ]Mr.  Neal  confirm 
that? 

Mr.  Brush.  Unless  you  and  Mr.  Neal  arrange  a rehabili- 
tation fund,  to  which  we  can  charge  it. 

(Commissioner  Eastman.  It  would  be  charged  to  profit 
and  loss? 

Mr.  Brush.  Yes. 

Commissioner  Eastman.  That  is  not  an  operatiiu:  charge? 

Mr.  Brush.  It  is  a charge  to  the  service. 

(Commissioner  Eastman.  That  is  a very  difi’erent  proposi- 
tion than  an  operatimr  ex])ense. 

Mr.  Brush.  I don’t  know  enough  to  try  to  discuss,  Mr. 


1917.] 


HOUSE  — No.  1875. 


179 


Chairman,  the  subject  of  depreciation  which  is  still  open.  I 
would  not  endeavor  to  qualify,  as  Mr.  Neal  can,  who  I 
understand  has  discussed  it  at  great  length  with  the  Com- 
mission. 

Mr.  Walcott.  Speaking  of  the  amount  of  vacant  land  in 
Cambridge,  I would  like  to  speak  individually,  and  not  as  a 
member  of  the  commiittee.  We  tabulated  the  list  from  the 
assessor’s  books  and  there  is  at  the  present  time  S50,000  of  the 
Elevated  land  entirely  vacant,  which  was  taken  at  the  time 
the  terminal  was  built  in  Brattle  Square.  That  land  has 
remained  vacant  since  1909,  and  this  is  the  first  year  it  has 
been  advertised  for  sale  on  the  premises. 

Besides  that  150,000  of  absolutely  vacant  land  there  is 
$100,000  of  unoccupied  land  which  is  a part  of  the  holdings 
which  are  occupied  partially  or  used  partially  by  the  com- 
pany; that  is  to  say,  the  vacant  land  around  the  car  barns 
used  to  a small  extent  for  the  storage  of  a few  mostly  obso- 
lete cars.  It  is  hard  to  see  how  any  part  of  that  land  is  of 
value  to  the  Elevated.  It  is  fair  to  say,  however,  in  the  last 
year  they  have  sold  off  about  $50,000  of  the  land,  and  I see 
no  reason  why  the  rest  of  it  should  not  follow.  It  would 
seem  to  be  better  to  sell  it  at  a little  loss  than  to  carry  it  for 
a series  of  years. 

The  Lieutenant-Goveenor.  Is  there  any  one  else  who 
desires  to  be  heard? 

Commissioner  Eastman.  Mr.  French,  in  the  statement 
which  is  to  be  furnished  to  the  Commission  of  the  parcels  of 
real  estate  not  used,  will  you  also  include  the  statement  of 
receipts  and  expenditures  on  account  of  real  estate  during 
the  past  year? 

Mr.  Brush.  Yes,  sir. 

Commissioner  Eastman.  Including  taxes? 

Mr.  Brush.  Yes,  sir. 

The  Lieutenant-Governor.  Does  anybody  else  desire  to 
be  heard? 

Mr.  Snow.  I think,  Mr.  Chairman,  I would  like  to  make 
this  statement  in  regard  to  our  real  estate.  Of  course  we 
stand  somewhat  differently  in  the  matter  of  taxes  on  real 
estate  than  do  individual  owners;  because  the  taxes  on  our 


180 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


real  estate  are  deducted  from  our  corporate  taxes,  so  that  in 
a certain  sense  it  does  not  cost  us  anything  for  taxes  on  the 
real  estate,  because  if  we  did  not  pay  real  estate  taxes,  we 
would  have  to  pay  it  in  corporate  franchise  tax. 

Commissioner  Eastman.  You  don’t  believe  you  can  es- 
cape taxation  in  that  way,  do  you? 

Mr.  Snow.  No,  but  if  we  did  not  pay  taxes  on  real  estate 
we  would  have  to  pay  that  additional  amount  in  corporate 
franchise  tax. 

Commissioner  Eastman.  Well,  if  you  had  not  expended 
your  money  for  the  property,  you  would  not  have  to  pay  so 
much  franchise  tax? 

Mr.  Snow.  It  goes  back  a great  many  years. 

Commissioner  Eastman.  There  is  no  magic  process  by 
which  you  can  escape  the  burden  of  taxation  on  that  real 
estate. 

Mr.  Snow.  We  pay  taxes  on  the  real  estate,  but  it  re- 
duces the  amount  of  the  corporate  franchise  tax. 

The  Lieutenant-Governor.  Let  your  statement  show 
the  amount  you  paid  out,  on  account  of  real  estate,  and 
what  reductions  you  are  entitled  to  on  that  account. 

Are  there  any  further  questions  by  the  committee?  Is 
there  any  one  else?  [No  response.] 

I have  a statement  here  from  W.  J.  McDonald,  95  Milk 
Street,  which  if  there  is  no  objection  we  will  have  put  into 
the  record. 

Statement  by  Mr.  IV.  J.  McDonald. 

A Solution  of , the  Problem  of  the  Boston  Elevated.  — No 
solution  of  the  problem  involved  in  the  financial  situation  of 
the  Boston  Elevated  will  prove  satisfactory  which  does  not 
provide  for  the  growing  transportation  needs  of  metropolitan 
Boston. 

The  facts  which  must  be  faced  are  these:  The  officers  of 
the  company  claim  tliat  the  Elevated  in  its  present  financial 
condition  ought  not  to  be  expected  to  expend  any  large  sums 
of  money  for  development,  and  Boston’s  needs  for  more  and 
better  transportation  facilities  are  pressing. 

The  Elevated  now  ])ays  rentals,  for  subways  and  tunnels, 
to  the  amount  of  about  S1,()()(),()()0  a year.  If  the  Elevated 


1917.] 


HOUSE  — No.  1875. 


181 


were  relieved  of  this  burden,  its  financial  status  would  be 
saved,  according  to  officials  of  the  company.  This  can  be 
brought  about  in  a very  simple  way  and  to  the  great  ad- 
vantage of  the  public  of  metropolitan  Boston. 

Here  is  the  solution;  Let  the  city  of  Boston  release  the 
Elevated  from  rental  charges  of  all  subways  and  secure  legis- 
lation permitting  the  Elevated  to  collect  a 6-cent  fare.  The 
extra  cent  should  not  go  to  the  Elevated,  but  should  revert 
to  the  city  of  Boston,  to  be  administered  by  the  Transit 
Commission. 

The  Elevated  last  year  carried  about  365,000,000  pas- 
sengers. On  the  basis  of  this  patronage  an  extra  cent  of 
fare  would  bring  $3,650,000  a year  to  be  turned  over  to  the 
city  of  Boston.  Of  this  sum  $1,000,000  would  reimburse  the 
city  for  the  annual  rentals  for  subways  and  tunnels,  of  which 
burden  the  Elevated  would  be  relieved,  and  there  would 
remain  $2,650,000  a year  to  be  spent  by  the  Transit  Com- 
mission for  urgently  needed  subways  and  other  transporta- 
tion development.  Of  course  the  revenues  would  increase 
as  the  patronage  increases. 

This  solution  w^ould  prove  a real  solution  of  Boston’s  trans- 
portation problem.  In  the  first  place,  and  most  important, 
it  would  insure  the  new  subways  which  metropolitan  Boston 
so  sorely  needs  right  now.  In  the  second  place,  it  would 
serve  to  put  the  Elevated  on  its  feet  and  enable  that  corpo- 
ration to  give  a much  better  service.  The  extra  cent  of  fare 
would  go  to  the  city,  not  the  railroad  company,  and  it  would 
simply  mean  an  easy  way  for  the  people  themselves  to  pay 
for  their  transportation  development. 

Measured  by  the  advantage  which  would  accrue  to  every 
one  of  the  hundreds  of  thousands  of  users  of  the  trolley 
system  of  metropolitan  Boston,  the  extra  penny  paid  to  the 
city  would  seem  insignificant.  Indeed,  in  the  matter  of  time 
saved  alone,  it  would  be  an  investment  of  great  value  to  the 
men  and  women  who  travel  to  and  from  Boston  each  day. 
Suppose,  for  example,  that  a new  subway  were  to  save  each 
person  ten  minutes  at  each  end  of  the  day,  going  to  and  re- 
turning from  business.  The  figures  of  time  to  be  saved  are 
astonishing,  and  the  benefits  cannot  be  measured  in  terms  of 
dollars  and  cents. 


182 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


In  view  of  the  fact  that  the  people  of  metropolitan  Boston 
themselves  would  really  get  three  and  a half  million  of  dollars 
each  year  would  induce  them  gladly  to  contribute  two  cents 
a day,  thus  doing  imperative  jpstice  to  the  Elevated  and  at 
the  same  time  providing  for  the  new  subways  and  improve- 
ments which  would  put  Boston  on  the  twentieth  century 
transportation  map. 

A significant  fact,  finallj^  is  to  be  remembered.  If  the 
Elevated  were  to  be  relieved  of  subway  rentals,  the  city  of 
Boston  would  have  to  find  the  funds  to  make  good  the 
revenue  to  the  city.  If  this  were  to  be  done  out  of  taxes  the 
burden  would  ultimately  reach  real  estate,  which  now  pays 
80  per  cent  of  the  total  tax,  and  real  estate  can  stand  no 
further  burdens. 

The  Lieutenant-Governor.  If  there  is  no  one  else,  we 
will  declare  the  hearing  closed.  The  Commission  will  take  a 
recess  until  2.15,  for  an  executive  session. 


Hearing  closed. 


1917.] 


HOUSE  — No.  1875. 


183 


SEVENTH  DAY. 

Hearing  held  at  Room  362,  State  House,  Boston,  Mass., 
at  2 P.M.,  on  December  4,  1916. 

Sitting.  — All  the  members  of  the  Commission,  viz.,  the 
Lieutenant-Governor,  President  Wells,  Speaker  Cox,  Senators 
Bates  and  Eldridge,  Representatives  Jewett  and  Newhall, 
Commissioners  Macleod,  Meaney,  Stone,  Eastman  and 
Russell  [of  the  Public  Service  Commission]  and  Commis- 
sioners Allen,  Ellis,  Quincy  and  Noyes  [of  the  Boston  Transit 
Commission]. 

Absent.  — Representative  Donovan  and  Commissioner 
George  F.  Swain. 

'Appearances.  — For  the  Boston  Elevated  Railway  Com- 
pany: Matthew  C.  Brush,  Esq.,  President,  Frederic  E. 
Snow,  Esq.  [Gaston,  Snow  & Saltonstall],  Counsel.  For  the 
Boston  Real  Estate  Exchange:  Hon.  Nathan  Matthews  and 
Francis  R.  Bangs,  Esq.  For  the  city  of  Boston:  Hon.  John 
A.  Sullivan,  Corporation  Counsel. 

The  Lieutenant-Governor.  The  Commission  will  be  in 
order.  Do  you  wish  to  be  heard,  Mr.  Sullivan? 

Hon.  John  A.  Sullivan. 

If  you  please.  I have  to  apologize  for  having  to  read 
so  much  of  my  statement,  gentlemen,  but  I did  not  have 
time  to  prepare  myself  to  state  it  wholly  without  the  aid  of 
notes. 

The  Lieutenant-Governor.  If  it  is  brief  you  need  not 
apologize. 

Mr.  Sullivan.  It  will  be  briefer  by  reason  of  being  read. 

When  Mayor  Curley  appeared  here  a few  weeks  ago  you 
probably  remember  that  he  said  that  his  position  would 
probably  be  misrepresented,  that  he  would  suffer  the  penalty 
of  having  taken  a position  on  a matter  of  vital  interest  to 
the  city  of  Boston  which  had  so  many  controversial  sides  as 


184 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


the  question  now  pending  before  you.  And  that  prediction 
has  been  verified;  he  has  been  misrepresented. 

One  of  his  critics  has  since  stated  that  the  Mayor  wanted 
Boston  alone  to  contribute  to  the  Boston  Elevated  Railway’s 
relief,  through  a reduction  in  the  Elevated’s  taxes,  although 
the  Mayor  made  it  very  clear  that  all  cities  and  towns  in  the 
road’s  territory  should  share  in  equal  proportions  in  any  tax 
reduction,  and  made  it  equally  clear  that  he  would  oppose 
any  such  reduction  if  this  Commission  should  find  that  the 
road’s  financial  condition  is  due  to  its  mismanagement  or 
should  find  that  relief  could  be  provided  without  reducing 
its  taxes. 

I think  it  must  have  seemed  very  clear  to  you,  and  of 
course  it  was  written  down  in  the  record  as  he  stated  it, 
that  the  scheme  he  suggested  would  require  the  contribution 
in  the  way  of  the  reduction  in  taxes  from  each  of  the  munici- 
palities through  whose  territory  this  railroad  operated,  and 
he  also  made  it  equally  clear  that  he  was  opposed  to  any 
such  reduction  if  this  Commission,  after  considering  all  of 
the  evidence,  should  find  that  the  road’s  financial  condition 
is  due  to  its  own  mismanagement  or  should  find  that  relief 
could  be  provided  in  some  way  other  than  by  reduction  in 
taxes  or  increase  in  fares. 

Another  critic,  speaking  for  the  Boston  Real  Estate  Ex- 
change, has  also  misrepresented  the  city’s  situation,  or  to 
speak  more  precisely,  the  city’s  financial  relation  to  the  tun- 
nels and  subw’avs,  so  as  to  make  it  appear  that  it  has  been 
blundering  along  in  a reckless  fashion  throughout  the  entire 
history  of  Boston  rapid  transit  legislation.  This  criticism, 
unlike  the  other,  comes  from  a responsible  source,  and  there- 
fore the  correction  should  be  put  upon  the  record  at  once. 

The  criticism  is  that  the  tunnel  and  subway  leases  and 
rentals  are  unfavorable  to  the  city,  that  the  city  is  sustain- 
ing losses  annually  on  this  account;  and  the  implication  is 
that  public  ownership  is  bad  financial  policy,  and  that  we 
should  have  been  better  off  if  the  road  had  built  and  owned 
the  tunnels  and  subways,  and  had  paid  taxes  on  this  property 
to  the  city.  Now,  to  these  objections,  I think,  there  are 
conclusive  answers.  The  leases  and  rentals,  taken  as  a whole. 


1917.] 


HOUSE  — Xo.  1875. 


185 


are  very  favorable  to  the  city;  the  city  sustains  no  loss  on 
their  account,  but  will  ultimately  gain  greatly  by  them.  As 
to  public  ownership,  it  is  too  late  to  question  this  policy  it 
seems  to  me,  for  it  has  had  the  sanction  of  the  Legislature, 
of  the  city  government,  and  of  the  people  as  expressed  by 
popular  vote.  It  is  so  firmly  established  that  no  man  would 
now  undertake  to  change  it.  Moreover,  I am  -convinced  that 
if  the  people  had  to  choose  to-day  between  a very  favorable 
contract  between  the  road  and  the  city,  involving  the  road’s 
ownership  of  the  subways,  and  an  unfavorable  contract  in- 
volving the  city’s  ownership,  they  would  choose  the  latter 
and  stand  the  financial  loss  rather  than  surrender  their 
ownership  and  control  to  a private  corporation. 

The  only  doubt  that  has  ever  been  expressed,  it  seems  to 
me,  is  as  to  whether  or  not  the  public  has  gone  far  enough 
in  this  direction,  whether  they  should  not  have  added  public 
operation  to  public  ownership.  Personally  I should  oppose 
public  operation,  but  that  of  itself  is  a question  simply  of 
.expenditure.  If  the  day  ever  arrives  when  these  communities 
are  so  well  organized  that  they  can  administer  these  trans- 
portation systems  efficiently  and  economically,  then  it  will 
be  proper  at  that  time  for  the  public  to  operate  the  trans- 
portation systems  as  well  as  to  own  them.  In  my  judgment 
that  day  has  not  arrived,  and  the  best  solution  of  this  kind 
of  problem  is  to  have  the  public  own  the  subways  and  tun- 
nels and  lease  them  to  private  corporations  to  operate  them. 

Knowing  the  history  of  the  public  ownership  of  these  tun- 
nels and  subways,  therefore,  I was  astonished  when  I read 
the  Boston  Real  Estate  Exchange’s  wail  over  the  taxes  it 
said  the  city  is  losing  on  the  tunnels  and  subways,  — losing 
because  the  city  owns  the  property  and  therefore  cannot  tax 
the  road  on  it.  In  other  words,  because  the  city  cannot  tax 
non-taxable  property. 

This  loss  was  put  at  8200,000  a year,  and  it  made  it  look 
as  if  the  city  needed  a conservator.  Of  course  there  is  no 
loss  of  taxes  on  the  tunnels  and  subways,  any  more  than 
there  is  on  the  City  Hall  or  the  City  Hospital,  or  any  other 
property  which  the  city  owns. 

The  case  was  made  to  appear  worse,  however,  when 


186 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


another  loss  was  added,  — 8250,000  a year  this  time,  — 
which  was  stated  as  the  annual  deficit  in  the  interest  and 
sinking  fund  requirements  for  the  tunnel  and  subway  loans. 
This  conclusion  that  there  is  an  annual  loss  to  the  city  of 
8450,000  a year,  which,  by  the  way,  was  stated  as  the  tax 
payers’  contribution  to  the  operation  of  the  system,  and  I 
never  heard  of  a more  singular  abuse  of  terms  in  my  life,  — 
was  reached  by  combining  two  causes  of  losses  which  could 
not  possibly  co-exist,  — the  combined  losses  of  public  and  of 
private  ownership  throughout  the  same  period. 

This  Commission  cannot  be  misled  by  such  a fallacy.  If 
the  road  had  built  and  owned  the  property,  the  city  would 
not  have  had  to  issue  bonds  and  meet  interest  and  sinking 
fund  requirements,  but  the  city  would  have  collected  taxes 
on  the  property.  As  the  city  has  built  and  owns  the  prop- 
erty, it  had  to  issue  bonds  and  meet  interest  and  sinking 
fund  requirements,  but  it  has  not  lost  taxes  because  its  own 
property  is  not  taxable.  Therefore  you  cannot  logically  com- 
bine losses  on  taxes  and  deficits  in  interest  and  sinking  fund 
requirements,  because  you  cannot  have  losses  from  both 
causes  at  the  same  time. 

More  serious  than  this  illogical  combination  of  losses  from 
two  causes,  — one  or  the  other  of  which  could  not  have 
existed,  — is  the  misstatement  as  to  the  annual  deficit  in 
the  interest  and  sinking  fund  requirements  of  the  city’s  rapid 
transit  loans.  It  was  said  that  this  would  be  $250,000  a 
year,  including  an  estimated  deficit  of  $60,000  a year  when 
the  Dorchester  tunnel  is  opened.  The  deficit  for  the  fiscal 
year  1915  was  said  to  be  $194,765  on  the  subways  and  tun- 
nels, exclusive  of  the  Dorchester  tunnel. 

In  the  first  place  there  was  no  deficit  in  the  interest  re- 
quirements in  the  year  1915,  or  in  any  prior  year,  and  there 
never  will  be.  ]\Iark  you,  I am  not  now  speaking  of  sinking 
funds,  but  speaking  solely  of  sinking  fund  requirements,  and 
the  statement  was  made  that  there  was  a deficit  in  the  sink- 
ing fund  and  the  interest  requirement,  and  that  is  the  one 
I am  .speaking  of. 

The  combined  rentals  will  always  take  care  of  the  com- 
bined interest  charges,  because  the  average  rate  of  interest 


1917.] 


HOUSE  — No.  1875. 


187 


paid  by  the  city  on  the  bonds  is  3.84  per  cent,  and  the  rentals 
paid  to  the  city  are,  speaking  broadly,  4|  and  4f  per  cent, 
except  in  the  case  of  the  East  Boston  tunnel  where  the  rent 
until  June  10,  1922,  is  f of  1 per  cent  of  the  road’s  gross 
receipts  from  all  the  lines  it  owns,  leases  or  operates,  and  is 
4|  per  cent  of  the  net  cost  of  the  tunnel  from  that  date  to 
July  1,  1936.  The  exception  is  the  case  of  the  East  Boston 
tunnel  where  the  rent  as  I say  until  1922  is  f of  1 per  cent 
on  all  the  lines  owned,  operated  and  leased  by  the  company, 
and  per  cent  of  the  net  cost  of  the  East  Boston  tunnel 
from  June  10,  1922,  to  July  1,  1936. 

Commissioner  Eastman.  How  much  is  the  contribution 
of  the  tax  payers  to  the  East  Boston  tunnel? 

Mr.  Sullivan.  I was  coming  to  that  in  my  remarks. 

Commissioner  Eastman.  You  have  got  the  figures  there? 

Mr.  Sullivan.  Yes.  You  mean,  because  of  the  money 
appropriated  from  taxes,  to  take  care  of  the  penny  tolls? 

Commissioner  Eastman.  Yes. 

Mr:  Sullivan.  Yes,  I have  that.  An  annual  deficit  in 
interest  requirements  on  the  East  Boston  tunnel  will  occur 
in  the  period  beginning  February  8,  1916,  the  date  when  the 
penny  tolls  were  abolished,  and  ending  June  10,  1922,  when 
the  4^  per  cent  rental  begins;  but  the  deficit  will  be  easily 
absorbed  by  the  excess  of  rentals  over  interest  requirements 
in  the  other  tunnels  and  subways.  So  that  taking  that  as  a 
whole,  even  during  the  period  when  we  appropriated  some 
taxes  to  take  the  place  of  penny  tolls  from  East  Boston  tun- 
nel, the  combined  interest  charges  will  be  met  and  more  than 
met  by  the  combined  rentals  paid  by  the  company. 

Commissioner  Eastman.  Is  it  true  that  the  rental  of  the 
Tremont  Street  subway  will  be  reduced,  beginning  next  year? 

Mr.  Sullivan.  Yes,  sir;  reduced  to  4|  per  cent,  from  4|. 

Commissioner  Ellis.  You  gave  the  dates  within  which 
the  deficit  will  occur,  beginning  February  8. 

Mr.  Sullivan.  February  8,  1916. 

Commissioner  Ellis.  When  does  that  period  of  deficit 
end? 

Mr.  Sullivan.  June  10,  1922. 

Commissioner  Ellis.  Thank  you. 


188 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


]\Ir.  Sullivan.  There  will  be  no  actual  deficit,  of  course. 
I mean,  the  excess  of  interest  charges  over  the  rentals.  Of 
course  you  understand  how  that  came  about.  It  was  not 
because  of  any  defect  in  the  calculation  made  at  the  begin- 
ning of  the  lease.  Then  the  rental  was  f of  1 per  cent  plus 
the  penny  toll,  and  the  rental  of  f per  cent  and  the  penny 
toll  more  than  covered  the  interest  and  charges  and  sinking 
fund  requirements.  As  a matter  of  fact  the  payments  into 
the  sinking  fund  have  been  greatly  in  excess  of  the  amounts 
contemplated  by  the  original  calculation.  But  the  so-called 
deficit  that  occurs  is  because  we  have  taken  away  the  penny 
tolls  for  some  six  years.  So  that,  speaking  broadly,  you  can 
see  that  there  is  not  now,  there  has  never  been  any  deficit 
in  the  interest  requirements  from  the  rentals  of  these  sub- 
ways as  a whole. 

In  the  second  place,  the  net  deficit  in  sinking  fund  require- 
ments was  not  8194,765  in  1915;  it  was  only  858,869.74,  as 
shown  by  figures  furnished  me  by  the  city  auditor,  which  I 
am  prepared  to  show  in  detail  to  this  Commission,  if  it  so 
desires.  You  see  that  is  only  a slight  difference  of  8136,000. 
Perhaps  not  for  the  record,  but  as  a 'matter  of  information 
that  you  may  be  interested  in  — . 

Commissioner  Eastman.  Mr.  Sullivan,  is  the  sinking  fund 
estimated  to  pay  the  principal  of  the  bonds  when  they  fall 
due? 

Mr.  Sullivan.  Yes,  sir. 

Commissioner  PIastman.  What  date  is  that? 

i\Ir.  Sullivan.  On  the  East  Boston  tunnel? 

Commissioner  Eastman.  On  all  the  tunnels.  Has  not  the 
loan  been  consolidated? 

Mr.  Sullivan.  There  is  a consolidated  loan,  and  an  aver- 
age due  date  for  all  these  tunnels.  I will  give  you  the 
information  I have  in  that  respect  as  soon  as  1 get  through 
with  my  more  formal  remarks,  if  you  don’t  mind.  What  I 
should  like  to  do  is  to  preserve  the  continuity  of  my  remarks 
until  I get  through  with  this  criticism. 

These  figures  show  that  the  sinking  fund  requirements  for 
1915  were  8249,081,  that  the  amounts  paid  into  sinking  funds 
were  8190,211.26,  and  that  the  net  deficit  was  858,869.74. 


1917.] 


HOUSE  — No.  1875. 


189 


The  error  of  the  Real  Estate  Exchange  in  attributing  a 
deficit  of  8135,895.26  more  than  the  actual  deficit  would  have 
been  avoided  by  one  less  anxious  to  criticise  the  effects  of  the 
rapid  transit  financial  scheme. 

The  next  point  which  should  be  made  clear  is  that  this 
deficit  of  about  $58,000  was  a cumulative  deficit.  It  was  not 
an  annual  deficit;  it  was  a total  deficit.  It  was  the  total 
deficit  in  the  sinking  fund  requirements  of  the  tunnel  and 
subways  from  the  beginning  of  the  subway  construction  in 
1895  down  to  the  end  of  the  fiscal  year  1915.  It  was  wrong, 
therefore,  to  speak  of  the  $194,765  as  an  ‘^annual”  deficit, 
even  if  that  had  been  the  proper  figure,  instead  of  being  only 
$58,869.74.  To  put  it  in  another  way,  if  we  had  had  $58,- 
869.74  more  from  rentals  in  1915,  the  results  of  twenty  years 
of  the  city’s  financing  of  tunnels  and  subways  would  have 
shown  not  one  single  cent  of  deficit  in  the  sinking  fund  re- 
quirements and  as  I have  already  explained  not  in  the  inter- 
est requirements  either.  The  actual  results  of  twenty  years 
of  the  city’s  ownership  of  rapid  transit  facilities  in  Boston 
are: 

1.  Xo  deficit  in  interest  requirements. 

2.  A total  deficit  in  the  entire  period  of  only  $58,869.74 
in' sinking  fund  requirements. 

3.  An  equity  in  favor  of  the  city  in  the  tunnels  and  subways 
of  $3,778,986,  represented  by  the  amount  in  the  sinking  funds 
up  to  January  31,  1916. 

And  all  this  without  calling  for  a single  dollar  from  the 
taxpayers  in  this  entire  period!  This  is  a record  of  which 
every  citizen  of  Boston  should  be  proud,  rather  than  be 
ashamed,  especially  those  who  believe  in  the  principle  of 
public  ownership. 

In  the  present  year,  1916,  the  taxpayers  made  their  first 
contribution  toward  the  cost  of  the  tunnels  and  subways. 

I am  speaking  now  of  the  taxpayers  as  distinguished  from 
the  car  riders,  and,  speaking  broadly,  the  car  riders  have 
paid  the  whole  cost  of  the  operation  of  this  road,  so  far  as  I 
am  able  to  discover,  and  the  taxpayers  have  paid  nothing. 
They  have  paid  not  only  the  cost  of  operation,  but  also  the 
cost  of  the  construction  of  the  tunnels  and  subways  them- 


190 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


selves.  So  far  as  the  taxpayers  having  contributed  a single 
dollar  toward  the  subways  and  tunnels  is  concerned,  I believe 
the  car  riders  have  done  it  all. 

The  city  appropriated  $77,910  from  taxes  to  take  the  place 
of  the  East  Boston  tunnel  tolls  which  were  abolished  on 
February  8,  1916.  Similar  appropriations  on  account  of  the 
East  Boston  tunnel  will  have  to  be  made  up  to  June  10, 
1922,  when  the  4|  per  cent  rental  on  the  net  cost  of  con- 
struction will  begin.  But  such  tax  appropriations  are  now 
beyond  criticism.  The  Legislature  by  chapter  184  of  the 
Special  Acts  of  1915  authorized  the  abolition  of  the  penny 
tolls  nuisance,  and  authorized  appropriations  from  taxes  as  a 
substitute,  and  the  Mayor  and  City  Council  accepted  the  act. 
The  people,  by  a substantial  majority,  had  previously  ac- 
cepted at  the  polls  a similar  act  providing  for  the  abolition  of 
the  tolls.  So  that  the  question  of  abolition  and  substitution 
of  taxes  for  tolls  has  been  put  before  the  Legislature,  before 
the  Mayor  and  City  Council,  before  the  people  of  Boston  at 
the  polls,  and  on  all  occasions  that  abolition  was  ratified. 
So  that  it  is  too  late  to  criticise  that  policy  now. 

Our  total  appropriations  for  this  purpose  will  probably  not 
exceed  $400,000.  This  sum  is  less  than  one-half  of  the  value 
of  our  present  equity  in  the  East  Boston  tunnel,  as  repre- 
sented by  the  $969,365.99  in  the  sinking  funds  on  November 
30,  1916. 

Of  course  we  shall  add  to  that  equity,  and  how  much  it 
will  amount  to  in  1922  I cannot  say  nor  can  the  city  auditor, 
without  figuring  it  out.  But  it  will  be  two  or  three  times  as 
much  as  the  total  contribution  from  tax  payers,  at  all  events. 

Now  I do  not  imply  that  there  will  be  no  debt  when  the 
existing  bonds  mature.  There  will,  of  course,  be  some  net 
debt  on  some  of  the  tunnels  and  subways,  but  that  will  be 
refunded  and  will  eventually  be  retired  so  that  the  city  will 
own  the  entire  system  of  tunnels  and  subways  estimated  to 
cost  about  $35,()(){), ()()(),  free  of  debt,  without  having  required 
any  contril)ution  from  the  tax])ayers  beyond  the  $400,000 
raised  to  take  the  i)lace  of  the  East  Boston  tunnel  tolls. 

I low  soon  that  date  will  arrive  no  one  can  say,  but  at  the 
time  that  date  arrives  the  city  will  own  free  of  debt  a very 


1917.] 


HOUSE  — No.  1875. 


191 


large  portion  of  the  tunnels  and  subways.  If  I were  asked 
to  hazard  a guess  I should  say  at  least  one-half  of  them. 

After  conference  with  the  city  auditor  respecting  the 
tunnel  and  subway  finances,  I feel  safe  in  stating  that  when 
the  average  due  dates  of  the  bonds  for  the  Tremont  Street 
subway,  the  East  Boston  tunnel,  and  the  Cambridge  con- 
nection are  reached,  there  will  be  enough  money  in  the 
sinking  funds  to  discharge  all  of  the  bonds  issued  in  payment 
of  such  structures.  In  other  words,  we  shall  have  them  at 
that  time  debt  free.  While  it  is  not  certain  that  the  Wash- 
ington Street  tunnel  will  be  debt  free  at  the  time  of  the  aver- 
age due  date  of  its  bonds  — October,  1946,  — the  present  in- 
dications are  that  it  will  be  debt  free  at  that  time.  This 
means  that  when  these  average  due  dates  are  reached  there 
will  be  about  $17,500,000  worth  of  subway  and  tunnel  con- 
struction which  will  be  fully  paid  for,  with  the  exception  of 
the  $400,000  previously  alluded  to.  And  I am  coming  now 
to  what  are  classed  generally  as  the  more  unprofitable  struc- 
tures, unprofitable  in  the  sense  that  the  excess  from  these 
will  have  to  be  paid  into  the  East  Boston  tunnel  for  a time, 
or  the  Washington  Street  tunnel,  so  that  they  come  later 
and  are  the  last  to  be  served,  and  I use  the  word  “unprofit- 
able” in  that  sense,  although  the  rentals  are  not  so  favorable 
in  those  cases  as  in  the  Tremont  Street  subway. 

At  the  time  the  average  due  date  of  the  bonds  for  the 
Boylston  Street  subway,  the  East  Boston  tunnel  extension, 
and  the  Dorchester  tunnel  are  reached,  there  will  not  be 
enough  money  in  the  sinking  funds  to  retire  such  bonds;  but 
by  1946  there  will  be  a very  substantial  amount  in  these 
sinking  funds,  and  beginning  with  1946  there  will  be  large 
additions  paid  in  from  the  rentals  of  the  subways  and  tunnels 
which  at  this  time  will  be  debt  free,  namely,  the  Tremont 
Street  subway,  the  East  Boston  tunnel,  and  Washington 
Street  tunnel.  Beginning  with  1946  there  will  be  available 
from  the  rentals  for  the  Tremont  Street  subway,  the  East 
Boston  tunnel,  and  the  Washington  Street  tunnel  approxi- 
mately $686,000  a year  which  will  be  paid  into  the  sinking 
fund  requirements  of  the  tunnels  and  subways  which  are  not 
then  debt  free,  viz.,  the  Boylston  Street  subway,  the  East 


192 


BOSTON  ELEVATED  RAILWAY. 


[.Alar. 

Boston  tunnel  extension,  and  the  Dorchester  tunnel.  After 
1952  there  will  also  be  about  $65,000  a year  excess  from  the 
Cambridge  connection  which  can  be  applied  in  a similar 
manner. 

Senator  Bates.  You  are  assuming  that  there  are  not  to  be 
any  more  loads  to  carry. 

Air.  Sullivan.  ' Yes,  I am  speaking  of  the  existing  con- 
struction. 

Commissioner  AIaCleod.  You  are  also  assuming  the  re- 
newal of  the  leases  that  exist,  on  the  existing  terms,  are  you  not? 

Air.  Sullivan.  Yes. 

Senator  Bates.  Does  not  your  argument  indicate  that  the 
present  rentals  are  not  adequate  to  carry  each,  by  itself? 

Air.  Sullivan.  No,  I make  no  such  intimation.  Aly  argu- 
ment is  that  the  city  has  not  suffered  by  subway  legislation. 

Senator  Bates.  Well,  you  rely  on  the  receipts  from  every 
tunnel  to  discharge  its  individual  indebtedness,  so  that  any 
new  contracts  that  we  make  ought  to  be  self  supporting. 

Air.  Sullivan.  Yes,  I think  so. 

Senator  Bates.  And  in  order  to  do  that  we  ought  to  have 
a higher  rate,  had  we  not? 

Air.  Sullivan.  I don’t  see  why. 

Senator  Bates.  Well,  \’our  surplus  which  you  are  going  to 
devote  to  these  subways  will  have  to  go  into  the  new  ones. 

Air.  Sullivan.  There  is  no  reason  why  each  future  sub- 
way should  not  finance  itself. 

Senator  Bates.  That  is  what  I say.  Each  subway  would 
have  to  finance  itself,  even  though  it  required  a larger  rental 
than  at  present. 

Air.  Sullivan.  It  ought  to  finance  itself. 

Senator  Bati:s.  Do  you  think  it  can  be  done  in  each  in- 
stance at  4^  per  cent? 

Air.  Sullivan.  It  depends  on  the  state  of  the  money 
market.  If  we  can  borrow  money  at  .4  or  or  slightly 
under  4,  yes.  If  we  make  a lease  at  4§  per  cent  and  pay  4 
])er  cent  for  the  money,  there  will  be  very  small  payments 
into  the  sinking  fund  and  it  will  take  a long  time  to  ex- 
tinguish the  bonds.  When  we  started  subway  construction 
we  borrowed  some  money  as  low  as  5 })er  cent,  and  .some  at 
.‘U  and  so  on. 


1917.] 


HOUSE  — No.  1875. 


193 


Commissioner  Macleod.  Do  you  remember  what  is  the 
most  recent  rate  which  has  been  secured  by  the  city  on  any 
bonds  issued  by  it? 

Mr.  Sullivan.  I did  not  get  the  first  part  of  your  ques- 
tion, Mr.  Macleod. 

Commissioner  Macleod.  I wanted  to  know  what  rates 
the  city  has  had  to  pay  on  its  bonds  recentl^q  — on  its  most 
recent  bonds. 

Mr.  Sullivan.  When  money  was  tight  a couple  of  years 
ago  I think  we  paid  4|  in  one  instance.  That  is  the  highest 
I have  ever  known. 

Commissioner  Stone.  Will  not  the  new  leases  be  based  on 
what  you  have  to  pay  for  money? 

Mr.  Sullivan.  I should  think  so. 

Commissioner  Stone.  And  they  would  take  care  of  them- 
selves automatically? 

Mr.  Sullivan.  If  you  had  a panicky  time  and  money  was 
worth  6 per  cent,  you  would  not  want  to  make  leases  for  25 
years’  operation  based  on  6 per  cent,  because  you  would 
assume  that  money  would  not  remain  at  6 per  cent  for  the 
whole  time  of  the  lease.  You  would  have  to  assume  average 
conditions  on  which  to  base  your  lease. 

Commissioner  Noyes.  My  impression  is  that  we  figured 
it  out  the  other  day  and  that  it  would  cost  the  city  about 
3.80. 

Mr.  Sullivan.  3.80.  I have  already  stated  that. 

Commissioner  Noyes.  Yes,  just  about. 

Mr.  Sullivan.  That  is  the  average  rate. 

Commissioner  Noyes.  That  answers  the  question  of  my 
colleague. 

Commissioner  Eastman.  What  was  the  rate  on  the  last 
subway  bonds?  Have  you  that  here? 

Mr.  Sullivan.  I think  it  was  4 per  cent.  I don’t  think 
we  have  ever  paid  over  4.  Just  one  minute  and  I can  tell 
you  exactly.  [Examines  tabulation.]  Yes,  we  have.  We 
paid  4j  on  $1,400,000  on  the  Boylston  Street  subway,  and 
4j  on  $1,750,000  on  the  Dorchester  tunnel.  All  the  rest  of 
the  money  was  borrowed  at  4,  3 and  3^  per  cent.  We  have 
had  $3,050,000  as  high  as  above  4 per  cent. 


194 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commissioner  Noyes.  Were  there  some  premiums  to 
credit  against  those? 

Mr.  Sullivan.  Yes,  there  were.  Even  some  of  the  bonds 
guaranteed  at  a very  low  rate  of  interest  brought  a premium. 
I think  the  3 per  cent  bonds  brought  a premium  at  that 
time. 

Commissioner  Eastman.  Well,  that  4^  per  cent  on  some 
of  the  money  is  the  net  rate  of  interest  that  you  are  paying 
on  the  money? 

Mr.  Sullivan.  Yes,  that  is  the  actual  rate. 

Commissioner  Eastman.  It  is  not  the  actual  rate  if  you 
received  a premium  on  those  bonds. 

Mr.  Sullivan.  I cannot  tell  you  whether  we  got  a pre- 
mium on  those  two  issues,  the  $1,400,000  on  the  Boylston 
Street  subway  and  the  11,750,000  on  the  Dorchester  tunnel. 
I don’t  know.  We  got  premiums  on  some  of  the  earlier 
issues,  but  whether  we  did  or  not  on  the  later  ones  I am  not 
informed.  I can  find  out  for  you,  if  you  desire.  I was  about 
to  add  that  in  the  light  of  these  figures  it  is  difficult  to 
accuse  the  city  of  Boston  with  having  made  improvident 
contracts  in  connection  with  its  tunnels  and  subways. 

Before  concluding  I wish  to  allude  to  another  thing  which 
has  cropped  out  and  been  referred  to  in  these  hearings. 
Suggestions  have  been  made  of  ownership  of  the  tunnels  and 
subw’ays  by  a metropolitan  district,  and  control  by  a metro- 
politan commission.  The  mayor  desires  me  to  inform  the 
Commission  that  he  is  opposed  to  any  such  plan.  The  city 
has  taken  the  risk  of  financing  the  tunnels  and  subways  in 
Boston;  it  has  now  a substantial  equity  in  them,  and  it  will 
not  surrender  them  to  a metropolitan  district  now  that  its 
ex])eriment  seems  likely  to  succeed.  The  city  will  fight  such 
a ])lan  to  the  last  ditch.  Nor  will  it  consent  to  control  by  a 
metropolitan  commission.  It  owns  its  tunnels  and  subways 
and  it  wants  only  Boston  citizens  on  any  commission  which 
plans  future  ra])id  transit  devehqmient  within  Boston  terri- 
tory. 

We  have  reason  to  believe  that  a metro])()litan  commission 
would  very  early  in  its  career  ])lan  ra})id  transit  develo])ment 
in  such  a way  as  to  subordijiate  Boston  interests  to  outside 


1917.] 


HOUSE  — No.  1875. 


195 


interests,  and  put  our  highways  under  a new  servitude  in 
favor  of  other  cities  and  towns  in  the  metropolitan  district. 
Such  plans  wmuld  probably  find  favor  in  the  Legislature, 
owing  to  its  political  complexion,  and  such  great  undeveloped 
areas  as  West  Roxbury  and  Dorchester  would  have  to  wait 
until  outside  interests  had  first  been  served. 

Boston  has  already  contributed  greatly  toward  the  up-, 
building  of  outside  municipalities,  and  it  makes  no  com- 
plaint of  this  now,  but  its  contribution  justifies  it  in  demand- 
ing the  rapid  transit  facilities  necessary  to  develop  its  waste 
areas  before  it  puts  its  highways  under  new  burdens  for  the 
benefit  of  outlying  communities. 

Let  me  point  out  the  necessity  of  such  further  develop- 
ment in  Boston.  In  the  parts  of  West  Roxbury,  Roslindale 
and  Dorchester,  within  the  boundaries  of  new  wards  23,  24, 
21  and  20,  there  are  11,560  acres  of  land  with  a population 
of  93,514,  or  8 persons  to  an  acre.  In  the  rest  of  Boston 
there  are  40.4  persons  per  acre.  These  four  wards  have  41 
per  cent  of  the  land  in  the  city  and  only  12.5  per  cent  of  the 
population.  These  wards  should  have  the  development, 
through  better  transportation  facilities,  which  is  necessary  to 
build  up  their  waste  areas  and  to  increase  the  population. 

Until  better  transportation  is  provided  the  development 
will  be  slow,  and  the  city’s  growth  will  be  retarded.  For  the 
benefit  of  the  entire  city  these  districts  must  be  better  served 
in  the  means  of  transportation.  The  need  is  vital  and 
because  of  this  we  shall  insist  upon  a Boston  commission  to 
meet  Boston  needs  before  we  assist  in  financing  future  tunnels 
and  subways  in  Boston  which  are  designed  to  improve  trans- 
portation facilities  for  the  people  living  outside  of  the  city. 

Now,  if  the  Commission  desire.s  to  ask  me 'any  questions  I 
shall  be  pleased  to  respond. 

Representative  Lawler.  What  recommendation  would  you 
make  to  this  Commission  on  the  subject  of  taking  over  the 
Cambridge  subway? 

Mr.  Sullivan.  The  Mayor  is  on  record  in  favor  of  taking 
over  the  subway  by  somebody. 

Representative  Lawler.  What  recommendation  would  he 
make  as  to  the  authority  which  shall  assume  control? 


196 


BOSTON  ELEVATED  RAILWAY. 


[]Mar. 

Mr.  Sullivan.  I don’t  think  the  Mayor  has  suggested  any 
definite  means  of  control.  He  suggested  that  he  was  in  favor 
of  the  principle  of  public  ownership  of  the  subway.  He  did 
not  express  himself  in  favor  of  State  ownership  or  metropoli- 
tan district  ownership. 

Representative  Lawler.  The  reason  I asked  that  was 
that  you  read  a statement  saying  that  the  Mayor  was 
opposed  to  having  a metropolitan  commission  composed  of 
citizens  other  than  citizens  of  Boston.  Now,  if  the  State 
takes  over  this  — 

Mr.  Sullivan.  No.  I think ‘I  said  he  was  opposed  to 
having  a metropolitan  commission  to  take  charge  of  the  sub- 
ways and  tunnels  in  Boston.  He  does  not  oppose  a metro- 
politan commission  to  take  over  the  subways  and  tunnels 
outside  of  Boston;  not  at  all. 

Representative  Lawler.  You  have  not  any  suggestion 
to  make? 

Mr.  Sullivan.  My  suggestion  is  that  Boston  citizens, 
having  Boston  interests  at  heart,  be  put  and  kept  in  control 
of  Boston  subway  and  tunnel  development  until  these  great 
communities  of  West  Roxbury  and  Dorchester  have  built  up 
by  adequate  transportation  facilities,  and  not  take  the  chance 
of  having  a metropolitan  commission  which  would  recom- 
mend to  the  Legislature  and  whose  recommendations  the 
Legislature  would  undoubtedly  follow  for  political  reasons, 
and  have  tunnels  built  to  Ljmn  and  other  communities,  leav- 
ing Dorchester  and  West  Roxbury  waiting  to  be  served. 

Representative  Lawler.  I get  your  point  on  that,  but 
the  Commission  has  under  consideration  the  taking  over  of 
the  Cambridge  subway.  I wanted  to  ask  you  what  you  and 
the  Mayor  of  Boston-  say  , about  this  new  tunnel,  — what 
commission  would  he  recommend  ])utting  it  under? 

]Mr.  Sullivan.  He  has  not  expressed  himself  as  to  the 
control.  He  said  he  would  favor  taking  over  the  Cambridge 
subway  by  the  State  or  by  the  city.  If  I were  a citizen  of 
Cambridge  I shoujd  want  the  city  to  do  it,  but  if  the  city  of 
Cambridge  is  unable  to  do  it  because  of  its  present  financial 
condition,  the  State  could  do  it  until  the  city  could  take  it 
off  its  hands. 


1917.] 


HOUSE  — No.  1875. 


197 


Commissioner  Eastman.  What  do  you  mean,  Mr.  Sulli- 
van, by  having  a commission  in  control  of  the  subways  and 
tunnels? 

Mr.  Sullivan.  Of  having  a metropolitan  commission? 

Commissioner  Eastman.  The  present  subways  and  tun- 
nels are  not  under  the  control  of  a commission,  are  they? 
The  building,  the  construction  of  the  tunnels  is  under  the 
control  of  the  Transit  Commission,  but  the  tunnels  after 
they  are  constructed  are  not  controlled  by  a commission,  are 
they? 

Mr.  Sullivan.  The  building  is  under  the  control  of  a 
commission. 

Commissioner  Eastman.  But  I say,  after  they  are  built, 
no  commission  has  definite  control  of  those  subways,  has 
there? 

Mr.  Sullivan.  No,  but  I would  like  to  see  them  have 
control  in  the  sense  that  I would  like  the  Commission  to 
plan  future  development  of  subways  and  tunnels,  and  not 
have  the  initiative  taken  by  the  Legislature.  Let  the  Com- 
mission decide  upon  the  extension  of  the  system,  subject  to 
some  check  by  other  authority  such  as  the  acceptance  by  the 
Governor  and  Council,  and  acceptance  by  the  Mayor  and 
city  government. 

Commissioner  Eastman.  Under  the  best  conditions  the 
policy  respecting  subways  and  tunnels  has  been  governed  by 
the  Legislature,  sometimes  advised  by  the  Transit  Commis- 
sion. Is  it  your  idea  that  there  should  be  a Boston  commis- 
sion having  control  over  that  matter? 

Mr.  Sullivan.  Yes,  sir.  I do  not  care  to  have  the  Legis- 
lature, if  I could  avoid  it,  mixing  up  in  Boston  subway  and 
tunnel  matters.  I should  like  to  have  them  keep  their 
hands  off. 

Commission,er  Eastman.  But,  in  so  far  as  part  of  the 
burden  falls  on  other  cities  and  towns  than  Boston,  they 
would  each  pay  their  share.  Under  those  circumstances  do 
you  think  the  planning  of  new  subways  should  be  left  in  the 
hands  of  the  Boston  commission? 

Mr.  Sullivan.  Yes,  so  far  as  the  Boston  tunnels  are  con- 
cerned, decidedl3^  And  when  you  speak  of  contributions 


198 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


from  the  outside  communities,  I think  it  is  fair  to  answer 
that  these  communities  for  a long  time  have  been  getting  the 
benefits  of  rapid  transit  without  any  contribution  of  any 
kind  themselves. 

Commissioner  Eastman.  I understand  you  to  say  there 
has  been  no  contribution,  also,  by  the  tax  payers  of  Boston. 
Am  I right  in  that? 

Mr.  Sullivan.  I do  say  so,  but  I said  tliat  the  city  of 
Boston  took  the  risk  of  financing  some  $35,000,000  of  sub- 
way construction,  and  it  is  entitled  to  some  consideration 
because  of  the  risk  it  assumed.  It  has  turned  out  that  the 
experiment  succeeded,  so  far,  and  probably  will  succeed  in 
the  future,  but  it  might  have  gone  the  other  way. 

Commissioner  Eastman.  Isn’t  it  true  that  the  people  who 
made  it  possible  for  tlie  city  to  assume  that  risk  have  been 
the  people  of  all  the  metropolitan  district  served  by  the 
Boston  Elevated  Street  Railway  Company? 

Mr.  Sullivan.  I don’t  understand  it  so.  I don’t  see 
what  the  gentleman  who  gets  on  the  car  at  Chelsea  has  to  do 
with  it  at  all,  so  far  as  the  risk  is  concerned.  Suppose  we 
have  an  earthquake  that  blows  up  and  destroys  all  the  sub- 
ways and  tunnels:  what  contribution  would  Chelsea  make 
toward  repairing  the  loss? 

Commissioner  Eastman.  I understand  that  there  has  been 
no  burden  on  the  taxpayers,  but  the  burden  has  been  borne 
by  the  riders.  The  gentleman  who  rides  from  Chelsea  and 
from  Revere  and  from  Everett  helps  the  Elevated  to  bear 
the  rental. 

Mr.  Sullivan.  Of  course,  in  a sense,  they  do.  But  in  a 
sense  many  of  these  people  are  carried  at  a loss,  the  people 
you  refer  to.  That  is,  in  my  judgment  they  are  carried  at  a 
loss,  — the  peo])le  who  are  transi)orted  for  long  distances 
are  carried  at  a loss  in  my  judgment.  I think  the  Boston 
peoi)le  are  the  most  ])rofitable  customers  to  the  Boston  Ele- 
vated, because  you  have  a larger  number  of  short  riders,  if 
you  take  into  consideration  the  })opulation. 

Commissioner  Stone.  What  risk  does  a city  like  Cam- 
bridge take  if  it  is  given  j)ermission  to  take  over  that  subway, 
when  the  interest  and  sinking  fund  is  computed  beforehand? 

^Ir.  Sullivan.  Practically  none,  Mr.  Commissioner. 


1917.] 


HOUSE  — No.  1875. 


199 


Commissioner  Stone.  Other  than  the  earthquake  which 
you  speak  of. 

Mr.  Sullivan.  That  is  all.  And  there  are  not  likely  to 
occur  any  earthquakes  in  these  parts. 

Commissioner  Ellis.  Unless  they  are  political  earth- 
quakes. 

Mr.  Sullivan.  Even  political  earthquakes  don’t  seem  to 
have  any  effect  on  the  subways. 

Commissioner  Noyes.  Isn’t  it  true,  Mr.  Sullivan,  so  far 
as  you  have  gone  in  your  investigation  of  the  sinking  fund 
and  considering  the  price  of  money  and  the  condition  of  the 
money  market  when  these  bonds  were  put  out,  that  a thrifty 
arrangement  has  always  been  made  between  the  city  and  the 
operating  company?  That  the  whole  idea  was  to  take  care 
of  the  sinking  fund  and  take  care  of  the  bonds  at  maturity? 

Mr.  Sullivan.  Speaking  generally,  yes.  Of  course  the 
exceptions  would  be  the  ones  brought  out  in  answer  to  Mr. 
Commissioner  Eastman’s  question,  where  we  paid  4J  for  the 
money,  and  received  a 4|  per  cent  rental.  With  such  a 
slight  margin  as  that  it  will  take  a very  long  time  to  retire 
the  bonds,  and  we  ought  to  have  a larger  margin.  But  that 
came  about  in  this  way : these  subways  were  late  in  construc- 
tion, compared  with  the  others.  The  rentals  had  been  fixed 
at  4j  per  cent  in  the  previous  cases,  and  the  road  was  oper- 
ating under  the  limitations  of  a 5-cent  fare,  and  I presume 
the  Legislature  felt  that  under  the  operation  of  a 5-cent  fare 
the  road  could  not  afford  to  pay  more  than  4|  per  cent.  The 
city  did  not  have  anything  to  do  with  fixing  these,  but  at 
that  time  they  were  fixed  by  the  Transit  Commission. 

Commissioner  Noyes.  My  recollection  is  that  it  was  due 
to  the  high  price  of  money. 

Mr.  Sullivan.  Exactly. 

Commissioner  Noyes.  If  you  had  city  bonds  at  4J  per 
cent  now,  I think  some  of  us  could  sell  them  by  telephone. 

Mr.  Sullivan.  We  don’t  pay  4|  per  cent. 

Commissioner  Noyes.  In  one  or  two  cases  you  did. 
Those  were  abnormal  times. 

Mr.  Sullivan.  Times  of  financial  stringency. 

Cominissioner  Noyes.  It  is  true,' Mr.  Counsel,  to  say  that 


200 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


when,  in  1911,  the  Riverbank  subway  was  contemplated,  the 
Beacon  Hill  tunnel  was  contemplated,  that  the  most  thorough  , 
plan  was  devised  for  taking  care  of  these  bonds  at  maturity. 
Among  others  called  in  for  the  purpose  of  figuring  them  very 
carefully  was  the  actuary  of  one  of  the  largest  insurance 
companies,  and  that  with  very  careful  calculations  in  1915 
the  bonds  had  been  practically  taken  care  of  at  their  ma- 
turity, or  with  a very  small  balance. 

■Mr.  SuLLiVAX.  Why,  Mr.  Commissioner,  in  my  belief  at  a 
period  not  more  than  one  and  a half  generations  hence  the 
city  will  own  substantially  debt  free  all  of  the  existing  sub- 
way and  tunnel  construction,  and  will  be  getting  a rental 
which  it  can  apply  in  one  of  two  ways  most  beneficial  to  the 
people  of  Boston:  either  toward  decreasing  the  cost  of  gov- 
ernment or  increasing  the  municipal  activities,  or  in  the 
advancement  of  future  subways  and  rapid  transit.  There 
will  be  a large  fund  available,  and  if  that  be  true'  it  is  difficult 
to  see  how  any  serious-minded  man  can  criticize  this  policy 
as  showing  the  attitude  of  the  Legislature  toward  the  city  of 
Boston  on  its  subways  and  tunnels. 

Commissioner  Eastman.  The  situation  of  the  city  of 
Boston  is  rather  unique,  is  it  not? 

Mr.  Sullivan.  I am  informed  that  it  is.  I have  not 
examined  the  contract  in  New  York  and  Philadelphia,  but  I 
am  told  by  people  well  informed  that  the  contracts  in  Boston 
are  very  much  more  advantageous  than  those  in  the  other 
cities  I have  mentioned. 

Commissioner  Quincy.  If  there  has  been  any  improvi- 
dence it  has  not  been  on  the  part  of  the  city  of  Boston. 

]Mr.  Sullivan.  That  is  what  I believe,  Mr.  Quincy.  I 
don’t  want  to  admit  the  other  end  of  the  conclusion,  but  I 
will  go  with  you  as  far  as  that. 

Commissioner  Quincy.  Should  not  this  system  and  its 
financial  considerations  be  figured  upon  as  a whole? 

Mr.  Sullivan.  Absolutely. 

Commissioner  Quincy.  It  was  piece-meal  construction, 
and  taking  it  as  it  is  to-day,  it  is  my  opinion,  and  I should 
like  to  know  if  it  is  yours,  that  the  system  should  be  con- 
sidered as  a whole  and  its  cost  should  be  averaged  over  the 
whole  system. 


1917.] 


HOUSE  — No.  1875. 


201 


Mr.  Sullivan.  I think  so.  I see  no  reason  for  treating 
it  in  any  way  except  as  a consideration  of  the  whole.  That 
is  the  way  the  mone}^  counts  to  us  in  Boston.  It  is  the 
receipts  from  all  sources. 

Commissioner  Quincy.  We  have  been  discussing  seriously 
the  possibility  of  taking  over  the  Cambridge  subway.  If  the 
city  of  Cambridge,  with  the  sanction  of  the  Legislature,  were 
willing  to  sell  the  subway  to  the  city  of  Boston,  would  you 
see  any  objection  from  the  Boston  standpoint  in  adding  the 
Cambridge  subway  to  the  Boston  system? 

Mr.  Sullivan.  Yes,  sir;  I should.  It  may  be  a senti- 
mental one,  but  I think  we  should  not  go  beyond  our  own 
territory.  There  may  be  other  reasons  than  that  sentimental 
reason,  but  that  one  occurred  to  me  first.  I think  there 
would  be  other  reasons.  There  would  probably  be  a conflict 
of  control,  there  being  two  local  governments  controlling  in 
the  same  location. 

Commissioner  Eastman.  Is  there  any  way  that  the  Legis- 
lature could  make  the  city  of  Boston  sell,  unless  it  wanted 
to,  to  a metropolitan  commission? 

Mr.  Sullivan.  I suppose  the  State  could  take  our  sub- 
ways and  tunnels  by  eminent  domain  and  pay  us  for  them. 
I donT  know  of  any  other  method.  I read  a good  many  re- 
marks about  constitutional  restrictions,  which  appeared  in 
the  brief  presented  by  the  Boston  Real  Estate  Exchange,  but 
so  far  as  the  Mayor’s  statements  made  here  recently  are 
concerned,  I do  not  believe  there  is  any  legal  objection, 
legally  or  constitutionally,  to  any  of  the  suggestions  which 
you  made.  So  far  as  the  tax  rate  is  concerned,  I have  as- 
sumed that  the  State  in  its  sovereign  capacity  could  reduce 
the  tax  rate  as  well  as  increase  it. 

Commissioner  Quincy.  Would  not  the  State  have  exactly 
the  same  right  which  it  had  and  exercised  in  taking  over  the 
water  and  sewer  systems  of  Boston,  as  a metropolitan  organi- 
zation? 

Mr.  Sullivan.  Yes. 

Commissioner  Quincy.  The  State  would  be  obliged  to  pay 
a fair  cost,  to  be  determined  judicially  if  the  parties  did  not 
agree? 


202 


BOSTON.  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Sullivan.  Yes,  it  could  be  worked  out  in  that  way. 
I should  hate  to  see  the  thing  taken  over  by  the  State,  and 
I should  oppose  it,  because  the  whole  cost  paid  by  the  State 
for  recoupment,  I fear,  would  not  be  worked  out  through 
rentals.  They  might  undertake  to  raise  a portion  of  it  by 
taxation,  and  if  they  did  the  city  of  Boston  would  be  paying 
back  about  one-half  of  that  amount.  If  they  did,  we  should 
be  very  skeptical  of  that  scheme. 

Commissioner  Quincy.  In  other  words,  at  the  present 
time  the  city  of  Boston  is  well  protected  and  has  no  share 
in  the  State  tax  to  pay. 

Mr.  Sullivan.  No. 

Commissioner  Quincy.  Under  new  ownership  and  pos- 
sibly with  a neW’  and  liberal  ownership,  the  city  of  Boston, 
paying  a large  proportion  of  the  State  tax,  might  have  to 
pay  a large  portion  of  the  deficit  if  one  were  created. 

Mr.  SuLLLV'AN.  There  is  no  doubt  about  that. 

Commissioner  Eastman.  As  I understand  the  situation  it 
is  the  provision  of  the  city  that  it  would  not  transfer  the 
subways  to  a metropolitan  district  unless  compelled  to  do  so 
by  the  exercise  by  the  State  of  the  power  of  eminent  domain. 

]\Ir.  Sullivan.  Exactly. 

Commissioner  Eastman.  And  in  that  case  you  would 
resort  to  court  proceedings  to  determine  the  amount  to  be 
paid? 

Mr.  Sullivan.  Without  a doubt.  And  we  should  want 
very  good  compensation  too. 

Commissioner  Quincy.  Would  you  want  more  than  the 
cost? 

]\Ir.  Sullivan.  Of  course  we  should.  Should  we  not  have 
anything  for  the  risk  we  have  assumed?  It  is  no  light  mat- 
ter to  stand  sponsor  for  $35,000,000  of  debt,  even  in  a city 
free  from  earthquakes,  and  there  is  no  doubt  that  we  would 
be  entitled  to  compensation  for  the  risk  that  we  took.  I 
think  there  would  be  no  question  about  that. 

Commissioner  Quincy.  Aside  from  the  question  of  special 
security  behind  these  bonds,  lias  not  the  high  general  credit 
of  the  city  of  Boston  been  a large  element  in  placing  the 
city’s  bonds  at  advantageous  rates? 


1917.] 


HOUSE  — No.  1875. 


203 


Mr.  Sullivan.  Very  important.  The  credit  has  been 
very  high  and  that  has  been  an  important  factor. 

Commissioner  Quincy.  It  does  not  follow  that  the  city  of 
Cambridge,  with  a similar  security,  could  make  as  favorable 
a loan. 

Mr.  Sullivan.  The  probability  is  that  they  could  not. 
They  would  probably  have  to  pay  a higher  rate  on  the  aver- 
age for  a long  term  of  years.  The  State  might  possibly  pay 
less  and  I have  no  doubt  it  would,  although  I doubt  if  the 
State  is  any  more  solvent  than  the  city. 

The  Lieutenant-Governor.  Are  there  any  more  ques- 
tions? 

Commissioner  Eastman.  Mr.  Sullivan,  in  case  the  plan 
for  remitting  taxes  be  adopted,  has  the  city  worked  out  any 
method  by  which  control  over  the  expenditures  of  the  com- 
pany might  be  exercised  in  order  to  protect  the  tax  payers? 

Mr.  SdLLiVAN.  I know  that  the  Mayor  has  not  worked 
out  such  a scheme,  and  I know  I have  not  done  so.  I as- 
sume that  that  is  the  pleasant  duty  of  this  Commission,  but 
I see  no  objection  to  the  principle  you  have  in  mind.  That 
is  to  say,  if  the  communities  are  to  give  substantial  relief  to 
the  company’s  financial  condition  through  a reduction  in 
taxes,  they  might  well  claim  that  they  should  have  some 
supervision  over  expenditures. 

Commissioner  Macleod.  Would  you  or  the  city  approve 
of  any  scheme  which  amounts  to  a guaranity  of  a 6 per  cent 
dividend  to  the  stockholders  of  the  company,  without  any 
real  public  control? 

Mr.  Sullivan.  I should  think  that  if  there  were  to  be 
a formal  guaranty  on  the  part  of  the  public  there  ought  to 
be  some  participation  by  the  public  in  the  control. 

Commissioner  Macleod.  Does  not  the  plan  offered  here 
involve,  except  upon  the  remote  contingency  of  the  deficit 
reaching  an  unexpected  amount,  that  the  6 per  cent  dividend 
should  take  precedence  over  the  repayment  of  any  of  the 
abatements  in  the  way  of  taxes? 

Mr.  Sullivan.  I may  not  have  understood  it  correctly, 
but  I had  thought  that  the  corporation’s  difficulty  with 
respect  to  the  6 per  cent  dividend  was  in  relation  to  the 


204 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


issue  of  new  securities.  That  its  inability  to  pay  6 per  cent 
interfered  with  the  issue  of  new  securities  and  the  raising  of 
money  from  that  source.  I assumed  if  they  were  allowed  to 
issue  securities  at  less  than  the  face  value,  they  would  not 
be  equally  insistent  upon  a 6 per  cent  dividend.  x\bout  that 
I am  not  informed. 

Commissioner  Macleod.  It  is  anticipated  that  if  the 
Cambridge  subway  is  taken  over  by  the  State  authorities, 
and  the  8500,000  deposited  with  the  State  is  refunded  to  the 
company,  it  will  have  ample  capital  to  finance  its  capital 
requirements  for  several  years  to  come. 

Mr.  Sullivan.  I don’t  know  whether  that  is  true 'or  not. 
It  is  not  true  if  what  the  road  has  stated  in  its  brief  is  true. 
That  is  all  I can  say. 

Commissioner  Eastman.  Mr.  Sullivan,  in  the  very  last 
portion  of  the  statement  made  by  the  company,  this  para- 
graph is  put  in  italics: 

Whatever  action  is  recommended  by  this  Commission,  it  should  in- 
clude some  arrangement  for  a period  of  years,  say  until  the  expiration 
of  the  present  subway  leases,  by  which  the  company  may  be  assured 
of  6 per  cent  dividends  so  long  as  it  is  properly  managed  and  properly 
performs  its  functions  as  a public  agent. 

Do  I understand  that  your  position  is  that  the  per  cent 
might  be  less  than  6 per  cent  if  there  were  such  a public 
guaranty? 

Mr.  Sullivan.  No,  what  I had  in  mind  was  that  if  the 
road  was  permitted  to  raise  the  money  on  stock  at  less  than 
par,  or  if  that  control  of  stock  issue  were  removed,  they 
could  raise  some  money  even  if  the  dividends  were  not  6 per 
cent. 

Commissioner  INIacleod.  Suppose  that  the  necessity  of 
meeting  future  capital  requirements  is  met  in  some  way, 
either  by  the  method  which  I have  indicated,  which  appears 
to  be  ample  for  any  future  needs  of  which  this  Commission 
has  been  advised,  or  in  some  other  way.  Is  it  your  opinion 
that  as  a matter  of  current  financing  on  the  part  of  the  com- 
pany, that  the  guaranty  of  the  0 i)er  cent  dividend  should  be 
made  to  the  stockliolders  of  the  company  even  if  that  in- 


1917.] 


HOUSE  — No.  1875. 


205 


volves  some  abatement  of  existing  taxes,  or  if  it  involves  a 
continuance  of  that  arrangement  until  such  time  as  the 
whole  or  a portion  of  that  tax  so  abated  might  be  paid  again 
by  the  company,  after  first  taking  care  of  its  dividend  of 
6 per  cent  to  the  stockholders? 

Mr.  Sullivan.  I don’t  care  to  express  any  opinion  as  to 
the  guaranty  of  the  6 per  cent  dividend,  Mr.  Chairman.  I 
am  not  sufficiently  acquainted  with  the  Elevated’s  finances 
to  speak  with  any  authority  on  that  subject  whatever.  I 
am  assuming  that  their  difiiculty  is  that  they  cannot  issue 
stock  because  they  are  not  paying  6 per  cent  dividends,  and 
they  are  cut  off  from  raising  money  in  that  way. 

Senator  Bates.  In  Mr.  Matthew’s  brief,  on  the  second 
page,  he  represents  to  us  that  there  is  an  annual  deficit  of 
nearly  $200,000.  You  have  stated  that  that  was  a cumu- 
lative deficit,  as  I understand  it,  of  $58,000. 

Mr.  Sullivan.  $58,000  from  the  beginning  of  the  subway 
construction  in  1895  down  to  the  end  of  the  fiscal  year  1915. 

Senator  Bates.  Then,  do  you  admit  that  there  w^as  an 
annual  deficit  in  the  last  year  of  $194,000? 

Mr.  Sullivan.  Well,  you  see  the  sinking  fund  require- 
ments are  figured  anew  each  year.  It  did  figure  out  that 
much  last  year. 

Senator  Bates.  So  that  he  is  right,  when  he  says  that  for 
that  year  there  was  an  annual  deficit  of  that  amount? 

Mr.  Sullivan.  No,  it  was  the  deficit  in  all  the  years. 

Senator  Bates.  Well,  your  statement  shows  that  there 
was  an  accumulation  from  some  other  year  which  brought  it. 
down  to  $58,000. 

Mr.  Sullivan.  No,  I don’t  think  so. 

Senator  Bates.  Will  you  give  us  the  detail  of  the  figures 
which  show  that? 

Mr.  Sullivan.  No,  I cannot  do  that.  I should  be  glad 
to  if  I could.  The  auditor  informs  me  that  the  Sinking 
Fund  Commissioners  figured  out  the  sinking  fund  require- 
ments each  year  anew,  and  they  having  figured  it  out  last 
year  found  on  the  combined  subways  and  tunnels  there  were 
$58,000  less  than  the  sinking  fund  requirements  for  the  year. 
In  that  sense  it  was  a deficit  for  the  year.  At  the  same  time 


206 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


it  is  true  that  if  they  had  had  $58,000  more  from  rentals, 
then  they  would  have  had  in  the  sinking  fund  all  that  was 
needed  according  to  the  estimates  made  at  the  beginning, 
and  all  that  will  be  needed  to  retire  the  bonds  if  carried  out 
in  the  same  scale  as  during  the  previous  years. 

Senator  Bates.  Then  you  do  not  assume  that  he  is 
warranted  in  the  statement  made  on  page  four,  that  there 
will  be  that  deficit  every  year? 

Mr.  Sullivan.  No,  I do  not. 

Senator  Bates.  How  can  we  determine  whether  he  is 
right  or  you  are  right,  if  you  have  no  figures  to  support  your 
contention  as  against  his?  That  is  what  I want  to  know. 

Mr.  Sullivan.  All  I know  is  that  the  city  auditor,  whose 
duty  it  is  to  estimate  the  sinking  fund  requirements,  has 
made  the  statement  to  me  that  this  $58,000  is  the  amount 
which  is  actually  short  in  the  amount  required  to  be  paid 
into  the  sinking  fund,  reckoned  from  the  beginning  up  to  the 
last  day  of  1915. 

Commissioner  Macleod.  Can  you  have  the  city  auditor 
prepare  a statement  in  the  nature  of  an  exhibit,  showing  the 
details  by  which  these  results  are  reached,  and  submit  it  to 
the  Commission? 

Mr.  Sullivan.  Respecting  this  $58,000? 

Commissioner  Macleod.  Yes. 

Mr.  Sullivan.  Yes,  sir;  I can. 

Commissioner  Eastman.  How  much  will  the  reduction  in 
the  rental  of  the  Tremont  Street  subway  amount  to,  Mr. 
Sullivan? 

Mr.  Sullivan.  Well,  if  you  figure  on  the  basis  of  the 
cost  of  construction  — the  basis  of  gross  debt  which  I don’t 
think  you  figure  on,  there  would  be  the  difference  between 
4|  and  per  cent,  or  f of  1 per  cent.  It  seems  to  me  it 
would  be  about  $15,000  roughly. 

Commissioner  Eastman.  Do  you  know  whether  the  city 
is  getting  anything  now  under  the  toll  provision  in  that  con- 
tract? 

Mr.  Sullivan.  No,  it  is  not.  1 understand  that  stopj)ed 
when  they  took  tlie  big  cars  out  of  that  Tremont  Street 
subway. 


1917.] 


HOUSE  — No.  1875. 


207 


Commissioner  Eastman.  When  they  took  the  Elevated 
trains  out  of  the  subway? 

Mr.  Sullivan.  Yes,  that  is  my  understanding  of  it. 

Commissioner  Eastman.  I thought  it  was  the  other  way 
around:  That  it  began  to  accrue  when  they  put  small  cars 
back. 

Mr.  Sullivan.  We  are  not  getting  it  now.  Do  you  mean 
this  subway  revenue  from  car  tolls  through  the  Tremont 
Street  subway? 

Commissioner  Eastman.  Yes,  sir. 

Mr.  Sullivan.  We  have  not  had  it  for  some  years,  have 
we,  Mr.  Snow? 

Mr.  Snow.  No. 

Mr.  Sullivan.  We  have  not  had  it,  and  while  I don’t 
know  just  when  it  was  that  it  stopped,  I think  it  was  when 
the  trains  were  taken  out. 

Commissioner  Macleod.  Is  your  estimate  as  to  the  time 
when  this  sinking  fund  requirement  will  be  met  and  ex- 
tinguished, based  on  the  amount  which  has  been  contributed 
under  existing  agencies  to  the  sinking  fund,  by  the  company, 
in  the  past? 

Mr.  Sullivan.  Yes,  figured  up  to  the  time  of  the  expira- 
tion of  the  leases,  and  assuming  a continuance  of  the  rentals 
paid  at  the  time  of  the  expiration,  up  to  the  date  of  the 
maturity  of  the  bonds. 

Commissioner  Macleod.  I don’t  know  whether  this  is  a 
fair  question  to  ask  you  or  not,  but  perhaps  it  is  a question 
which  has  got  to  be  considered  in  this  connection.  Do  you 
think  it  is  likely  that  in  the  future  Boston  subway  construc- 
tion can  be  placed  on  a 3 per  cent  basis,  or  per  cent,  as  it 
has  been  in  the  period  which  is  the  basis  of  your  calculation? 

Mr.  Sullivan.  Yes,  sir,  if  money  is  cheap  why  not? 
You  have  the  security  of  the  city  behind  it.  I would  not 
want  any  better  bonds. 

Commissioner  Eastman.  All  the  private  property  of  the 
city  is  security  for  the  bonds,  is  it  not? 

Mr.  Sullivan.  In  the  last  analysis,  yes,  sir. 

Commissioner  Macleod.  It  is  not  wholly  a question  of 
the  security  behind  it,  but  a question  of  the  prevailing  rates 
for  money,  isn’t  it? 


208 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Sullivan.  It  is  both,  and  the  security  has  a great 
influence  on  the  rate. 

Commissioner  Macleod.  I said  it  was  not  wholly. 

Mr.  Sullivan.  Not  wholly,  but  the  strength  of  the  se- 
curity has  a great  influence  on  the  rate  of  interest  on  the 
loan.  For  instance,  Mr.  Morgan  could  borrow  money  much 
cheaper  than  I could,  although  he  does  not  need  to  borrow 
so  much. 

Commissioner  Macleod.  In  spite  of  the  fact  that  the 
security  of  the  municipalities  has  increased  from  year  to 
year,  there  has  been  a good  deal  of  fluctuation  in  the  rate 
for  the  municipalities. 

Mr.  Sullivan.  Yes,  that  is  due  to  the  condition  of  the 
money  market,  and  also  to  the  variation  between  the  securi- 
ties themselves. 

Commissioner  Noyes.  Isn’t  it  a fact  that  Boston  can 
borrow  money  as  cheaply  as  any  other  major  city  in  the 
country? 

Mr.  Sullivan.  Yes,  sir. 

Commissioner  Noyes.  And  when  the  city  of  Boston  had 
to  issue  those  bonds  at  4J  basis,  and  undoubtedly  got  a big 
premium  for  them,  it  was  almost  a panicky  time? 

Mr.  Sullivan.  Yes,  and  other  cities  were  paying  6 per 
cent. 

Commissioner  Noyes.  I think  that  answers  Mr.  Macleod’s 
question. 

]\Ir.  Sullivan.  Yes,  I recall  at  this  very  time  some  mu- 
nicipal bonds  that  were  selling  at  5 and  6 per  cent,  right  in 
]\Iassachusetts,  too. 

Commissioner  Macleod.  iNIy  question  was  not  directed 
to  any  of  those  considerations  at  all,  and  I apologize  for  hav- 
ing asked  the  question  because  it  involves  having  your 
opinion  on  what  seems  to  be  a moot  question  at  the 
present  time:  Whether  it  is  to  be  ex])ected  that  the  present 
rates  of  money  which  are  unusually  high  are  likely  to  con- 
tinue after  the  termination  of  the  war,  or  whether  the  rates 
will  become  lower,  and  you  will  find  dilferent  people  who  pro- 
fess to  be  authorities  in  that  field  who  hold  diametrically 
opposite  views  regarding  it. 


1917.] 


HOUSE  — No.  1875. 


209 


Mr.  Sullivan.  Well,  there  is  a great  deal  of  money  in 
the  world,  and  I should  think  after  the  speculation  in  war 
stocks  had  subsided,  that  there  would  be  a great  deal  of 
money  to  invest  in  the  stable  securities  of  the  country,  and 
that  municipal  securities  would  stand  high  on  that  list,  and 
be  very  attractive.  However,  I am  not  a financier. 

Commissioner  Quincy.  Would  you  think  it  necessary,  Mr. 
Sullivan,  that  every  extension  of  the  Boston  subway  system 
should  bear  such  a rental  that  it  would  pay  for  itself  includ- 
ing the  sinking  fund  requirements,  within  the  period  of  forty 
or  forty-five  year  bonds?  Or,  would  you  consider  that  it 
might  be  sound  policy  and  sound  finance  for  the  city  of 
Boston  in  subway  construction  to  build  a subway  which  was 
not  expected  to  pay  its  own  sinking  fund  in  such  a period 
as  forty  or  forty-five  years,  but  would  leave  some  of  it  to  be 
made  up  subsequently? 

Mr.  Sullivan.  Yes,  sir.  I answer  yes  to  the  latter  part 
of  your  question.  I can  conceive  of  that  situation  very 
readily.  I think,  Mr.  Commissioner  Quincy,  that  the  whole 
value  of  transportation  facilities  is  underestimated  in  this 
community  as  a whole.  I think  it  is  one  of  the  functions  to 
which  governments  should  pay  particular  attention,  as  of 
interest  in  a most  vital  way.  I can  easily  conceive  of  a tun- 
nel or  subway  line  which  would  yield  so  much  to  the  city  of 
Boston  in  the  way  of  increased  values,  in  the  way  of  in- 
creased population,  by  building  up  prosperity  through  the 
whole  section  to  an  extent  that  perhaps  can  not  be  estimated 
altogether  in  dollars  and  cents,  that  the  city  would  be  justi- 
fied in  making  a contract  at  a low  rental  in  that  particular 
instance. 

Commissioner  Quincy.  That  is,  either  issuing  a bond  for 
a long  period,  say  fifty  years,  or  if  that  were  not  good  financ- 
ing, providing  deliberately  for  the  renewal  of  a portion  of 
the  debt  at  maturity? 

Mr.  Sullivan.  .Yes,  sir. 

Commissioner  Quincy.  And  then  we  would  not  be  going 
as  far  as  New  York  and  other  cities  have  gone  toward  giving 
financial  help  in  the  development  of  subways  for  present  use, 
in  the  way  of  paying  immediately  the  whole  charge. 


210 


BOSTON  ELF.VATED  RAILWAY. 


[Mar. 


INIr.  Sullivan.  That  is  true.  I think  a situation  might 
arise  which  would  justify  the  city  in  building  a certain  sub- 
way line  at  its  own  expense,  and  assuming  the  expense,  with- 
out reimbursement  at  all.  I can  conceive  of  such  circum- 
stances. Of  course  I would  not  advocate  that  as  any  part  of 
the  city’s  policy.  But  I can  conceive  of  such  a line,  which 
would  be  of  so  great  advantage  to  the  city  that  it  might  fore- 
go the  advantages  of  rentals  under  other  circumstances. 

Commissioner  AIacleod.  What  would  you  say  to  a 
scheme  by  which  during  the  initial  period  after  the  subway 
was  put  into  operation,  the  lease  should  be  confined  to  the 
amount  which  might  be  anticipated  merely  to  meet  the  in- 
terest charge?  That  is  to  say,  experience  has  shown  that 
when  new  subways  are  first  constructed  and  operated,  usu- 
ally a certain  period  must  elapse  before  those  new  lines  of 
transit  are  utilized  to  the  extent  which  will  justify  a return 
on  the  investment,  and  under  existing  conditions  where  the 
company  is  obliged  to  shoulder  the  full  cost  from  the  start, 
it  has  a tendency  to  postpone  beyond  the  proper  time  the 
improvements  which  are  needed. 

Mr.  Sullivan.  AVhat  .you  mean  is  that  if  the  road  should 
consent  to  operate  a subway  through  new  territory,  more  or 
less  undeveloped,  and  in  the  initial  years  of  operation  the 
business  would  not  yield  enough  to  provide  a fixed  rental, 
which  would  be  uniform  throughout  the  whole  lease,  whether, 
in  such  a case,  the  city  could  not  afford  to  make  a graduated 
rental,  beginning  with  a small  amount  in  the  earlier  years 
and  going  up  on  an  ascending  scale  and  figuring  the  same 
amount  of  rental  in  the  whole  period?  Is  that  your  cpies- 
tion? 

Commissioner  ^Macleod.  ]\ly  question  was  based  on  the 
theory  of  having  a rental  for  a j)eriod  of  five  years,  or  what- 
ever ])eriod  might  be  fixed  during  which  the  amount  of  the 
rental  ])aid  by  the  comj)any  would,  be,  say,  merely  sufficient 
to  meet  the  carrying  charges. 

iNIr.  Sullivan.  The  interest  recpiirements? 

Commissioner  Mauleod.  The  interest  recpiirements. 

Mr.  SuLLH  AN.  And  defer  the  ])rovisi(>n  of  a sinking  fund 
until  the  time  when  the  business  had  sufficiently  develo])ed 
on  that  road? 


•1917. 


HOUSE  — Xo.  1875. 


211 


Commissioner  Macleod.  That  is  the  idea. 

]Mr.  Sullivan.  Yes,  sir.  And  this  I assume  would  increase 
the  rental  during  the  latter  portion  of  the  lease,  so  that 
you  would  get  during  the  term  of  the  lease  a proper  amount 
to  cover  the  interest  on  sinking  fund  requirements.  I see  no 
objection  to  that.  The  city  should  be  guaranteed  against 
immediate  loss  by  having  the  rents  equal  to  the  interest 
requirements  from  the  beginning.  In  that  event,  you  see, 
in  the  early  years  when  we  would  be  getting  only  enough 
money  for  the  interest  requirements,  we  would  not  have  to 
resort  to  taxation  to  make  up  the  deficit.  The  payment  into 
the  sinking  fund  would  be  deferred  until  suA  time  only  as 
the  receipts  were  sufficient  to  justify  the  payments. 

The  Lieutenant-Govekno'K.  What  we  want  to  know  is, 
who  should  pay  for  subway  rentals  that  don’t  pay  now? 

'Mr.  Sullivan.  Do  you  mean  — the  people  who  use 
them? 

The  Lieutenant-Governor.  Yes. 

Mr.  Sullivan.  Of  course  that  goes  to  the  whole  question, 
Mr.  Chairman.  It  goes  to  the  root  of  it.  I am  in  hearty 
agreement  with  the  position  which  the  Mayor  took  the  first 
day  when  he  came  here.  I agree  that  theoretically  the  car 
riders  ought  to  pay  the  whole  cost  of  this  transportation. 
Theoretic'ally  they  ought  to.  The  traffic  ought  to  bear  its 
own  burden,  but  I think  as  a practical  matter  it  would  be  a 
great  deal  better  for  you  if  you  have  to  resort  to  one  of  the 
two  remedies  suggested,  namely,  reduction  of  taxes  or 
increased  fares,  — I believe  it  would  work  out  better  in  the 
long  run  to  have  a reduction  in  taxes,  at  least  temporarily, 
than  to  have  an  increase  in  fares. 

Commissioner  ]Macleod.  Do  you  think  there  is  some 
equity  in  having  the  taxpayers  make  some  contribution 
rather  than  have  the  car  riders  contribute  a fund  for  the 
purchase  of  the  subways  which  will  ultimately  become  an 
asset  of  the  city  in  its  corporate  capacity? 

iMr.  SuLiiiVAN.  Yes,  there  are  men  who  have  automobiles, 
who  may  never  use  the  street  cars,  but  at  the  same  time  the 
development  of  the  street  car  lines  has  helped  their  property 
values,  and  to  that  extent  they  may  well  be  called  upon  to 
assist. 


212 


BOSTON  ELEVATED  RAILWAY. 


[]\Iar.‘ 


Commissioner  Macleod.  If  such  a man  holds  his  prop- 
erty long  enough,  at  the  end  of  30  or  40  years  his- taxes  may 
be  decreased  because  the  city  will  be  receiving  rentals  from 
these  subways. 

Mr.  Sullivan.  Yes;  or  to  state  what  is  more  likely  to 
happen,  the  city  is  likely  to  undertake  certain  projects  which 
will  be  beneficial  to  the  taxpayers.  I think  it  will  take  that 
form  rather  than  the  other.' 

Commissioner  Macleod.  Even  under  that  theory,  it  will 
take  the  place  of  money  which  would  otherwise  have  to  be 
raised  by  taxation? 

Mr.  Sullivan.  Absolutely,  because  the  cities  are  going  on 
spending  more  and  more  money  regardless  of  whom  they  get 
it  from,  or  the  conditions  under  which  they  get  it.  There  is 
no  doubt  of  that,  under  the  conditions  of  universal  man- 
hood, that  they  are  going  to  get  all  they  want. 

Commissioner  Eastman.  If  the  subway  should  be  built  to 
Dorchester,  it  would  probably  increase  real  estate  values  in 
Dorchester  very  materially,  and  it  might  have  no  effect  on 
the  real  estate  intervening,  and  still  it  might  injure  it.  If 
the  burden  of  that  subway  is  to  be  thrown  on  the  taxpayers 
in  any  way,  don’t  you  think  that  the  people  ought  to  bear  it 
whose  values  have  been  increased  rather  than  those  who 
have  received  no  benefit  or  have  been  injured? 

Mr.  Sullivan.  No,  I do  not  subscribe  to  that.  I think 
you  might  regard  the  city  as  a whole,  as  we  do  in  all  other 
city  matters  except  where  we  make  special  assessments.  But 
in  the  ordinary  matters,  the  money  goes  into  particular 
enterprises  in  which  many  citizens  get  no  benefit  whatever. 
Whatever  benefits  one  is  assumed  to  benefit  all,  and  I think 
it  is  a fair  theory  which  works  out  well  as  a whole.  For 
instance,  a man  on  Beacon  Street  ])robably  very  seldom  goes 
over  to  enjoy  our  L Street  baths,  but  no  one  has  the  slightest 
hesitation  in  taxing  him  for  the  upkeep  of  the  L Street  bath. 

Commissioner  Eastman.  If  you  built  a subway,  you  would 
double  the  value  of  the  man’s  land,  and  he  has  not  paid  any- 
thing. The  city  or  the  street  railway  company  has  provided 
the  money  which  has  increased  the  value  of  his  land  in  that 


1917.] 


HOUSE  — No.  1875. 


213 


way.  Isn’t  it  equitable  that  he  should  pay  a part  of  the 
cost? 

Mr.  SuLLiVAX.  I don’t  think  it  is  equitable. 

Commissioner  Noyes.  If  his  land  were  increased  in  value, 
he  would  be  assessed  a higher  tax. 

• Mr.  Sullivan.  In  that  sense  he  would,  but  I assume  that 
what  the  commissioners  had  in  mind  was  whether  or  not  that 
man  should  have  a special  assessment  put  upon  him  in  some 
way. 

Commissioner  East^man.  That  is  it. 

Mr.  Sullivan.  I should  think  not.  I think  there  are 
objections  to  it  on  principle,  and  there  are  also  very  grave 
objections  in  practice,  in  the  working  out  of  any  such  scheme 
as  that.  I should  hate  to  go  into  court  to  enforce  an  assess- 
ment of  that  kind  against  a reluctant  contributor.  I don’t 
think  we  would  get  very  far. 

Commissioner  Quincy.  Hasn’t  the  city  of  Boston  had  a 
very  hard  time  in  trying  to  collect  such  betterment  assess- 
ments as  we  have  levied? 

Mr.  Sullivan.  A very  hard  time.  Mayor  Quincy  knows 
the  effort  and  the  fact  that  we  only  collected  I think  about 
6 per  cent  in  some  cases  of  the  amount  of  betterments  as- 
sessed. 

Commissioner  Eastman.  Do  you  think  it  would  be  pos- 
sible for  the  city  to  condemn  a certain  amount  of  land  and 
get  the  benefit  itself? 

Mr.  Sullivan.  Theoretically,  that  is  sound.  We  have 
had  an  excess  condemnation  statute  on  our  City  of  Boston 
Statutes  for  some  years,  and  have  never  used  it  yet.  The 
street  commissioners  of  the  city  of  Boston  have  not  found  a 
single  case  where  they  thought  it  would  be  possible  to  use 
that  method.  It  is  assumed  it  would  work  out  successfully 
as  it  has  in  England,  but  I am  not  sure  of  the  facts  there. 
I am  told  it  was  a failure  in  the  light  of  later  returns.  I 
don’t  think  it  has  been  attended  with  great  success  in  this 
country.  I have  not  heard  of  it,  at  least.  One  place  where 
we  might  possibly  have  worked  that  scheme,  Mr.  CoinmivS- 
sioner,  was  at  Avery  Street.  If  we  had  had  an  act  enabling 
us  to  take  land  in  that  case,  it  might  have  been  a help.  It 


214 


BOSTON  ELEVATED  RAILWAY. 


Plar. 


is  between  two  business  streets,  and  if  we  had  taken  a large 
area  there  we  might  have  recouped  after  a while.  But  the 
city  is  a poor  real  estate  manager.  It  is  not  well  equipped  to 
take  land  and  hold  it  for  sale,  — not  as  well  equipped  as 
private  management  is,  and  I should  expect  great  losses 
rather  than  gain. 

The  Lieutenant-Governor.  I think  we  have  co'/ered 
the  matter,  Mr.  Sullivan.  Thank  you  very  much. 

Commissioner  Noyes.  Mr.  Chairman,  a representative  of 
the  Massachusetts  Real  Estate  Exchange  — 

The  Chairman.  Is  ]Mr.  Martin  here,  representing  the 
^Massachusetts  Real  Estate  Exchange? 

Commissioner  Noyes.  I was  just  going  to  say  that  some- 
body telephoned  during  the  hearing  that  they  were  jirepar- 
ing  the  case,  but  did  not  have  it  ready  for  to-day. 

The  Lieutenant-Governor.  Mr.  Washburn?  [No  re- 
sponse.] Is  there  anybody  here  representing  the  Boston 
Chamber  of  Commerce?  [No  response.]  Is  there  anybody 
else  here  who  desires  to  be  heard? 

Commissioner  Eastman.  Mr.  Chairman,  while  we  are 
waiting,  I should  like  to  ask  Mr.  Brush  one  question. 

The  Lieutenant-Governor.  You  may  state  your  ques- 
tion. 

Mr.  Matthew  C.  Brush,  President. 

Commissioner  Eastman.  ]Mr.  Brush,  I don’t  know 
whether  you  will  want  to  answer  this,  but  if  you  don’t  want 
to,  all  right.  Suppose  the  company  were  free  to  charge  any 
rate  of  fare  which  they  wished  to  charge.  Would  you,  as 
president,  recommend  that  it  increase  the  unit  of  fare  to  b 
cents  for  the  purpose  of  getting  additional  income? 

Mr.  Brush.  Do  yon  nu^an,  Mr.  Ch.airman,  in  preference 
to  any  other  scheme? 

Commissioner  Eastman.  Would  you  recommend  tliat  as  a 
reasonable  means  of  getting  more  income? 

Mr.  Brush.  ]\Iay  1 answer  it  in  this  way,  ^Ir.  Eastman? 
I think  it  is  unfortunate  to  have  to  have  a (i-cent  fare  in  any 
community.  1 think  you  should  go  so  far  even  as  to  sub- 
sidize a transportation  company  to  secure  a continuance  of  a 
fare  arrangement  on  which  the  community  has  been  built  up. 


1917.1 


HOUSE  — Xo.  1875. 


215 


In  this  particular  case,  in  the  case  of  Boston,  the  5-cent 
fare  is  greatest  with  the  rapid  transit  on  surface  lines  than 
in  any  place  in  the  world.  It  is  a great  inducement  to  live 
on  a 5-cent  fare.  I doubt  if  anybody  questions  but  what  it 
is  a financial  and  physical  impossibility  to  carry  people  from 
Arlington  Heights  to  Xeponset  for  5 cents,  under  the  present 
conditions,  and  there  is  no  street  railway  in  the  world  which 
provides  rapid  transit  and  surface  cars  with  exchange  be- 
tween the  two;  in  fact,  there  are  six  kinds  of  service  rendered 
on  this  system:  The  rapid  transit  trains,  underground,  on 
the  surface,  and  overhead;  the  surface  or  electric  car  ser- 
vice, underground,  on  the  surface,  and  overhead.  There  is 
no  street  railway  in  the  world  which  provides  rapid  transit 
and  surface  cars  with  exchanges  between  the  two  where  the 
territory  covered  is  any  such  number  of  square  miles  or 
street  mileage  as  covered  here.  I doubt  very  much  whether 
any  scheme  which  may  be  worked  out  by  the  Commission 
will  accomplish  what  is  absolutely  essential.  At  the  same 
time  I believe  if  it  is  possible  to  avoid  the  charging  of  the 
actual  six-cent  fare,  efforts  should  be  made  to  do  so. 

Commissioner  Eastman.  What  I wanted  to  get  at  is  this: 
Suppose  you  were  free  to  charge  a 6-cent  fare.  Do  you 
believe  a 6-cent  fare  would  be  a benefit  to  the  street  railway 
company? 

Mr.  Brush.  I have  no  question  in  my  mind.  I under- 
stand your  question  correctly  — and  it  is:  Would  you  lose 
enough  business  by  charging  the  G-cent  fare  to  offset  the 
benefit  of  that  unit?  Personally,  there  is  no  question  in  my 
mind  that  it  would  leave  a net  balance  on  the  right  side.  I 
do  not  believe  you  would  decrease  your  riders  sufficiently  to 
offset  the  benefit  you  would  receive  from  those  who  continue 
to  ride.  I speak  somewhat  positively  from  personal  observa- 
tion and  from  studying  it  elsewhere. 

As  to  the  expediency  of  it,  that  is  another  question,  as  to 
whether  you  would  get  your  money  back.  But  I believe  you 
would. 

Commissioner  Eastman.  You  don’t  believe  you  would  get 
20  ])er  cent? 

Air.  Brush.  I do  not.  By  no  means.  You  would  lose  a 


216 


BOSTON  ELEVATED  RAILWAY. 


[Alar. 


certain  amount  of  your  short-haul  riders,  and  the  short-haul 
riders  are  the  more  profitable.  It  is  the  short-haul  rider  who 
is  to-day  paying  the  fare  of  the  long-haul  rider.  If  we  go  out 
to  the  Library  to-day,  we  pay  the  fare  of  the  men  who  go 
to  Arlington  or  Neponset.  Where  the  limits  are,  nobody  can 
teii.  You  would  lose  some  short-haul  riders.  As  to  just  how 
much  you  would  lose,  the  man  don’t  live  that  can  answer 
you  exactly,  but  I believe  you  would  not  lose  enough  to 
offset  the  increase  you  would  get  through  the  increase  in  the 
unit. 

The  Lieutenant-Governor.  Do  you  want  to  make  any 
statement.  Air.  Snow,  before  Air.  Alatthews  comes? 

Air.  Snow.  No,  Air.  Chairman,  I should  like  to  hear 
what  Air.  Alatthews  has  to  say  in  addition  to  the  statement 
made  by  the  Boston  Real  Estate  Exchange.  I should  like, 
however.  Air.  Chairman,  to  ask  for  an  opportunity  to  be 
heard  in  reply  to  various  things  which  have  been  stated  to 
the  Special  Commission  during  these  hearings.  I have  felt 
as  the  hearings  went  along  that  it  is  only  fair  that  the  various 
speakers  should  have  an  opportunity  to  present  their  views 
without  interruption  from  the  Boston  Elevated  Company, 
and  that  that  would  be  the  m'ore  orderly  procedure.  And 
after  Air.  Alatthews  has  explained  his  views,  I would  like  an 
opportunity,  later  this  week,  Thursday  or  Friday,  to  present 
some  considerations  to  the  Commission  in  view  of  what  has 
been  stated  since  we  stated  our  case. 

Commissioner  Ellis.  I notice.  Air.  Snow,  that  the  figures 
on  page  49  of  your  brief  contain  the  estimate  of  the  operating 
expenses  up  to  and  including  June  30,  1918,  and  the  figures 
contained  on  page  50  give  some  estimate  as  to  probable  in- 
crease in  net  revenue  from  operation.  I think  that  the  Com- 
mission would  be  helped  if  those  figures  could  be  carried  for- 
ward several  years  more.  You  see  that  June  30,  1918,  is  just 
a year  or  so  from  the  present  time.  1 wanted  to  ask  whether 
estimates  could  not  be  made  uj)  covering  a couple  of  years 
more.  AVe  have  at  least  a three-year  j)rospect  before  us, 
both  on  the  estimated  expense  and  the  estimated  increase  of 
revenue. 

Air.  Snow.  Air.  Alatthews,  in  his  statement,  assumed  that 


1917.] 


HOUSE  — No.  1875. 


217 


these  figures  were  carried  up  for  the  additional  year,  beyond 
the  point  stated  in  the  brief.  It  is  an  extremely  difficult 
matter  to  make  any  estimate  of  this  kind  for  a period  so  far 
ahead  because  of  possible  changes  in  conditions.  So  far  as 
the  revenue  is  concerned,  it  depends  very  greatly  on  business 
conditions,  the  termination  of  the  war,  and  anything  of  that 
kind  may  seriously  affect  one  way  or  the  other  our  revenue. 
To  be  perfectly  frank,  I am  very  much  afraid  of  any  such 
estimate  because,  as  some  of  you  gentlemen  know,  I at- 
tempted some  years  ago  to  make  a five  years’  estimate 
which  turned  out  to  be  entirely  wrong,  not  because  it  was 
wrong  in  itself;  if  my  assumptions  had  been  correct  the 
result  would  have  been  right,  but  things  did  not  turn  out 
according  to  my  assumptions.  The  revenues  increased  faster 
than  I assumed,  and  many  of  the,  additional  facilities  were 
not  completed  in  the  time  in  which  they  were  expected  to  be 
completed. 

I had  intended,  however,  to  make  some  additional  state- 
ment in  regard  to  that,  in  view  of  Mr.  Matthews’  statement 
which  it  seems  to  me  was  extremely  misleading.  I expected 
to  do  that  if  I was  given  a further  opportunity  to  address 
the  Commission. 

Commissioner  Ellis.  I think  we  would  be  helped  by  an 
estimate  up  to  1920,  even  though  such  an  estimate  required 
making  some  assumptions  which  only  time  can  prove  to  be 
true  or  otherwise. 

Mr.  Snow.  I did  not  intend  to  go  beyond  June  30,  1919, 
because  our  labor  agreement  expires  May  1,  1919,  and  the 
question  of  what  we  have  to  pay  after  that  time  depends  on 
a new  agreement  and  is  a very  important  factor  in  our  op- 
erating expenses.  But  I will  endeavor  to  carry  it  up  to 
June  30,  1919. 

The  Lieutenant-Governor.  If  there  is  no  objection  we 
will  take  a recess  until  4 o’clock. 

►Short  recess. 

The  Lieutenant-Governor.  [At  4 o’clock.]  The  Com- 
mission will  be  ‘in  order.  The  Commission  will  hear  you, 
Mr.  Matthews. 


218 


BOSTON  ELEA\\TED  BAILWAY. 


[]\Iar. 


lion.  Xathan  Matthews. 

Mr.  Chairman  and  gentlemen  of  the  Commission,  I do  not 
know  that  I have  much  to  add  to  the  statement  or  brief 
submitted  by  ^Ir.  Bangs  the  other  day  for  the  Real  Estate 
hNchange,  and  all  I can  do  is  to  add  a few  words  of  personal 
comment. 

I have  considerable  sympathy  for  the  position  in  which  the 
directors  and  stockholders  of  the  Elevated  Railway  find 
themselves  at  the  present  time.  The  present  situation  is 
not  by  any  means  wholly  of  their  creation.  They  are  not  to 
be  regarded  as  marks  of  inefficiency,  like  the  directors  of  so 
many  other  public  service  companies  in  this  vicinity.  They 
have  not  committed  any  of  the  sins  of  omission  or  commis- 
sion which  we  charge  up  to  the  directors  of  the  Boston  & 
Maine  or  the  Bay  State  Railway  Company  or  the  New 
York,  New  Haven  & Hartford  Railroad.  And  therefore  I 
think  that  their  application  is  entitled  to  a good  deal  more 
respectful  consideration  than  any  that  might  be  made  by 
either  of  those  companies. 

I am  also  impressed  with  the  gravity  of  the  situation, 
and  I cannot  — looking  around  over  the  field  of  public,  serv- 
ice corporation  operations  in  this  community  in  the  last  ten 
years  — I cannot  but  feel  that  so  far  from  overstating  their 
case,  they  have  understated  it. 

I notice  that  the  capital  of  the  company,  meaning  raised 
capital  represented  by  bonds,  stocks  and  premiums,  is 
853,185,000,  and  that  their  assets  of  all  kinds  amount  to 
only  853,478,000.  There  is  a bookkeeping  surplus  of  assets 
representing  first  cost,  I have  it,  of  only  8300,000  on  850,- 
000,000  of  investment. 

On  the  face  of  it,  it  does  not  seem  to  me  it  indicates  that 
dei)reciation  has  been  fully  taken  care  of.  But  of  course  this 
comj)any’s  ])roperty  is  of  such  a nature  that  it  dej)reciates 
less  than  the  ])ro])erty  of  any  other  j)ublic  .service  corporation 
in  the  world,  I su})i)ose;  but  at  the  same  time  a sur])lus  of 
oidy  8300,000  in  853, 000, 000  docs  seem  a little  small  as  the 
result  of  twenty  years  of  o])eration,  and  I cannot  hel])  per- 
sonally feeling  that  the  community  must  face  the  time 


1917.] 


HOUSE  — Xo.  1875. 


219 


sooner  or  later,  and  probably  sooner  instead  of  later,  when 
it  must  be  prepared  to  pay  in  fares  such  increase  to  the 
Boston  Elevated  Railway  as  will  permit  the  directors  of 
that  company  to  put  more  in  its  surplus  account  from  year 
to  year;  that  is,  to  pay  more  from  earnings  into  construction 
than  they  have  been  doing  in  the  past  twenty  years.  There 
is  no  — 

Commissioner  Eastman.  Mr.  Matthews,  you  did  not  in- 
elude  their  depreciation  in  that  surplus,  did  you? 

Mr.  Matthews.  I think  it  is  all  there.  I cannot  figure 
out  over  8300,000  on  their  $53,000,000,  and  on  the  face  of  it 
for  an  ordinary  corporation  it  would  be  ridiculously  inade- 
quate. Of  course  this  company  does  not  need  the  deprecia- 
tion reserve  which  an  ordinary  street  railway  does,  but  it 
seems  to  me  that  they  ought  to  have  paid  more  from  earn- 
ings into  construction,  which  would  be  reflected  by  their 
surplus  beyond  this  small  sum  of  money,  after  twenty  years 
of  operation. 

I do  not  believe  that  even  that  company,  as  well  managed 
as  it  may  be,  can  run  on  indefinitely  on  those  lines.  The 
situation  therefore  is  serious,  and  it  may  be  very  serious, 
more  serious  than  the  directors  are  willing  to  face. 

Now,  if  there  is  any  criticism  to  be  dealt  out  to  the 
managers  of  this  corporation,  it  is  that  they  have  not  hitherto 
been  bjave  enough  to  face  the  difficulties  of  their  situation 
when  they  first  appear. 

I should  say  that  the  time  for  the  company  and  its  direc- 
tors and  stockliolders  to  consider  what  was  going  to  happen 
was  five  years  ago,  when  this  last  extravagance  of  burden  in 
the  shape  of  the  Dorchester  tunnel  was  placed  upon  them. 

It  would  seem  to  me,  and  I speak  with  some  deference,  it 
would  seem  to  me  that  that  would  have  been  a more  appro- 
priate season  for  the  directors  of  the  Boston  Elevated  Rail- 
road to  have  stopped  and  asked  the  public  what  they  were 
going  to  do.  They  did  not  stop;  they  went  on,  and  to  that 
extent  they  are  at  fault.  But  I do  not  contend  that  they  are 
in  the  same  class  with  the  Boston  k 'Maine  Directors,  who 
paid  dividends  for  ten  years  that  they  knew  or  ought  to  have 
known  they  did  not  earn.  Xor  do  I put  them  in  the  same 


220 


BOSTON  ELEVATED  RAILWAY. 


class  as  the  directors  of  the  Bay  State  Street  Railway  Com- 
pany, who  paid  dividends  for  ten  or  twelve  years  that  they 
knew  or  ought  to  have  known  they  did  not  earn.  Or  the 
directors  of  the  New  York,  New  Haven  & Hartford  Railroad 
when  they  were  raising  all  the  capital  they  could  find  in  New 
England,  in  gold,  and  spending  it  on  things  at  five  times  their 
value. 

The  present  situation  is  not  wholly  due  to  causes  beyond 
the  control  of  directors  of  the  Elevated  Railroad.  They 
might  have  considered  them  five  years  ago  when  it  was  im- 
pending, and  stopped  and  asked  the  public  what  they  would 
do  about  it  then.  It  seems  to  me  that  was  the  time  when 
they  ought  to  have  done  it.  But  in  any  event,  whether  the 
situation  is  as  grave  as  the  directors  represent,  or  graver  yet, 
it  does  not  seem  to  us  to  be  so  grave  in  character  or  degree 
as  to  warrant  any  present  consideration  of  a readjustment 
of  rents  or  taxes,  so  as  to  throw  upon  the  community  itself, 
the  tax  payers,  the  towns  or  cities  in  their  corporate  capacity 
a greater  burden  than  they  now  sustain. 

As  to  an  increase  of  fares,  that  may  or  may  not  be  nec- 
essary. I am  personally  one  of  those  who  are  inclined  to 
believe  that  we  are  now  facing  or  soon  will  face  the  time 
when  the  public  cannot  be  transported  at  the  low  rates  of 
the  preceding  quarter  of  a century.  Everything  else  in  the 
world  has  been  going  up  in  the  last  ten  or  fifteen  years,  and 
the  purchasing  power  of  money  has  been  declining.  Those 
two  causes  have  combined  to  increase  the  cost  of  everything, 
and  why  that  should  not  apply  to  transportation  cost  as 
well  as  to  the  cost  of  other  things,  commodities,  et  cetera,  I 
do  not  know. 

I suspect  that  sooner  or  later  this  community  must  face, 
for  both  railroads  and  street  railways,  an  increase  in  fares.  I 
am  rather  skeptical,  however,  whether  the  time  has  come 
when  it  is  necessary  to  consider  an  ijicrease  in  fares  for  the 
patrons  of  the  Elevated,  and  I base  that  doubt  on  the  com- 
j)iitation  which  was  ])resented  for  the  kixchange  the  other 
day,  and  which,  as  near  as  I can  figure  it  out,  and  I have 
looked  at  it  since  and  I find  jio  error  in  it  that  I can  deduct, 
on  the  showing  made  by  the  directors  themselves  they  will 
be  uj)on  a (>  jH*r  cent  basis  within  three  short  years. 


1917.] 


HOUSE  — No.  1875. 


221 


I am  told  that  there  were  two  errors  in  that  computation. 
On  the  one  side  I am  told  I left  out  the  cumulative  effect  of 
the  agreement  respecting  service,  and  that  amounts  to 
$200,000  for  one  year  more.  If  that  was  left  out  by  me,  it 
is  because  it  was  left  out  by  the  company.  If  it  should  be 
included,  that  would  prolong  the  period  for  a few  months 
when  they  could  find  themselves  on  a 6 per  cent  basis. 

I am  also  told  that  I did  not  give  full  weight  on  the  other 
side  of  the  computation  to  the  cost  of  carrying  the  Cam- 
bridge subway  if  it  should  be  sold  to  the  State  or  the  city 
of  Cambridge,  or  the  metropolitan  district.  I reconsidered 
my  computation  on  that  point  and  I decided  to  let  it  stand. 
I think  I have  given  full  weight  to  all  the  financial  consid- 
erations, — financial  consequences,  I might  say,  that  would 
flow"  from  that  transaction. 

The  result  is,  as  I now  see  it,  that  in  a little  over  three 
years  the  company,  on  its  own  showing,  will  be  able  to 
resume  dividends  at  6 per  cent.  Therefore  the  present  prop- 
osition is  to  increase  fares  or  reduce  the  company’s  taxes,  or 
to  take  a slice  out  of  the  rents  that  we  get  from  the  subways, 
for  the  purpose  of  enabling  a private  corporation  to  declare 
six  instead  of  five  per  cent  dividend,  and  in  violation  of  three 
or  four  contracts  which  were  deliberately  entered  into  at 
various  times.  It  seems  to  me  that  is  a preposterous  prop- 
osition to  put  before  the  public,  with  the  expectation  that 
either  branch  of  the  Legislature,  the  Chief  Executive,  or  the 
people  upon  a referendum  would  sanction  it  for  a moment. 

It  is  sometimes  assumed,  and  I would  like  to  make  this 
point  again,  although  it  was  clearly,  I think,  established  in 
the  typew-ritten  brief  that  was  submitted  to  you  the  other 
day  — it  is  sometimes  assumed  that  the  subway  is  not  any 
burden  to  the  taxpayers  of  Boston.  It  cost  us  $250,000  a 
year,  which  is  the  annual  deficit  shown  in  that  paper,  the 
figures  being  obtained  from  Mr.  Mitchell,  the  city  auditor, 
and  I have  added  to  it  an  estimate  wUich  he  will  tell  you 
is  substantially  correct,  of  $00,000  additional  deficit  wUen 
the  rent  begins  for  the  Dorchester  tunnel. 

Now,  so  far  from  the  city  of  Boston  in  its  corporate  capac- 
ity getting  the  interest  or  sinking  fund  requirements  of 


222 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


the  present  subway  each  year  into  the  city  treasury,  from 
the  road,  in  rent,  there  is  a shortage  each  year  of  $250,000. 

It  will  be  said,  of  course,  at  the  end  of  the  lease  or  rather 
at  the  end  of  some  extension  of  the  lease  coterminous  with 
the  maturity  of  the  bonds,  the  city  will  have  a subway, 
because  the  rent  is  supposed  to  include  a fund  to  extinguish 
the  debt  as  well  as  a fund  to  pay  the  interest.  But  that 
assumption  includes  the  annual  contribution  of  $250,000; 
and  if  you  take  that  into  account  and  compound  it,  even  at 
6 per  cent  once  in  three  years,  you  will  find  that  the  subway 
system,  instead  of  reverting  to  the  city  at  the  expiration  of 
these  loans,  free  of  cost,  will  cost  the  city  approximately 
two-thirds  of  the  present  aggregate  first  cost. 

The  Lieutenant-Governor.  Where  does  that  $250,000 
come  from,  Mr.  INlatthews? 

Mr.  IVIatthews.  How  is  it  being  paid? 

The  Lieutenant-Governor.  Where  does  it  come  from? 

IVIr.  Matthews.  It  is  paid  by  the  city  in  the  first  instance 
in  interest  on  the  bonds;  secondly,  in  the  annual  require- 
ments for  the  sinking  fund. 

The  Lieutenant-Governor.  Do  you  mean  that  the 
rentals  at  the  present  time  are  not  sufficient  to  pay  the 
interest?  • 

IMr.  Matthews.  They  fall  short,  in  accordance  with  the 
statement  in  the  pamphlet  submitted  to  you,  $196,000  now. 
Those  are  iMr.  Mitchell’s  figures  obtained  from  him  the  other 
day. 

Commissioner  Ellis.  In  interest? 

Mr.  Matthews.  Interest  and  sinking  fund  together. 

The  Lieutenant-Governor.  I did  not  say  anything 
about  sinking  fund,  but  interest  only. 

Mr.  Matthews.  I ])resume  they  take  care  of  interest. 

The  Lieutenant-Governor.  Then  this  deficit  is  in  the 
sinking  fund? 

Mr.  Matthews.  I should  have  to  figure  that  out. 
$250,000  a year  is  — yes,  that  would  be  entirely  in  the  sink- 
ing fund.  The  sinking  fund  would  be  about  nine-tenths  of  1 
])er  cent  roughly,  and  this  would  be  a little  less  than  that. 

The  LiEUTENANT-CrOVERNOR.  Is  this  what  you  mean. 


1917.] 


HOUSE  — Xo.  1875. 


223 


that  at  the  maturity  of  the  bonds  there  will  not  have  been 
enough  money  paid  in  so  that  they  can  be  retired? 

Mr.  Matthews.  Yes,  that  is  what  I mean. 

Commissioner  XMyes.  By  how  much? 

Mr.  Matthews.  Well,  it  is  accumulating  at  the  rate  of 
$250,000  a year,  and  a rough  computation  would  show  that 
about  two-thirds  was  unpaid. 

The  'Lieutenant-Goveenor.  If  the  bonds  were  short- 
time  bonds  and  matured  to-morrow  it  would  be  a great  deal 
more. 

Mr.  Matthews.  Oh,  yes. 

The  Lieutexaxt-Governor.  But  the  bonds  are  extended. 

]\Ir.  Matthews.  The  theory  as  I always  understood  it,  the 
representations  made  to  the  community  certainly  when  the 
act  of  1902  was  submitted  to  the  people,  and  I presume  at 
the  time  the  Act  of  1911  was  submitted,  were  that  the  4^ 
per  cent  would  take  care  of  the  entire  debt  at  its  maturity. 
But  it  won’t  do  it.  Some  of  the  subways  do  pay  for  them- 
selves. The  original  one  does  it,  and  this  deficit  of  $196,000 
at  the  present  time  is  the  compound  result  of  those  which 
pay  and  those  which  do  not  pay. 

Senator  Bates.  Mr.  Sullivan  was  here  this  afternoon  and 
stated  that  whether  or  not  there  was  a net  deficit  for  the  last 
year,  that  the  accumulated  deficit  was  only  $58,000.  If  the 
rentals  had  turned  in  $58,000  more,  all  of  the  payments 
which  should  be  made  on  account  of  subways,  both  interest 
and  sinking  fund,  would  have  been  paid.  He  said  he  got  his 
figures  from  the  city  auditor. 

Mr.  Matthews.  I will  put  my  statement  against  his  at 
any  time,  and  I will  stand  on  the  statements  made  in  the 
typewritteji  pa})er,  and  you  can  verify  it  from  Mr.  Mitchell. 

Senator  Bates.  We  understand,  then,  that  each  year  there 
has  been  an  average  deficit  of  $250,000? 

i\Ir.  Matthews.  Xo,  that  is  jiot  what  it  is.  It  is  the 
deficit  for  the  fiscal  year  1915-1 91  (). 

Senator  Batp:s.  Has  there  l)een  ajiy  sur])lus  which  would 
take  that  down? 

Mr.  Matthews.  There  must  have  beeji  iji  the  early 
years,  but  not  lately. 


224 


BOSTON  ELE^^\TED  RAILWAY. 


[Mar. 


Senator  Bates.  Then  it  is  right  that  there  is  an  accumu- 
lated deficit  of  only  S58,000? 

Mr.  Matthews.  I don’t  know  whether  it  is  right  or 
wrong,  but  there  will  be  that  deficit  each  year. 

Senator  Bates.  That  is  your  assumption? 

Mr.  Matthews.  No,  because  the  bonds  are  placed  and 
you  can  tell  what  the  deficit  is  going  to  be  very  closely. 
The  bonds  are  placed  and  the  sinking  fund  is  invested. 
There  may  be  no  divergence  between  the  two  sets  of  figures. 
It  may  be  that  the  profits  of  the  earlier  years  were  sufficient 
to  leave  only  a net  deficit  of  $58,000.  I have  not  looked  at 
it  in  that  way,  but  I am  very  confident  that  the  present 
deficit  is  $196,000,  and  it  will  be  more  next  year. 

Commissioner  Noyes.  We  have  understood  that  the  av- 
erage cost  to  the  city  of  all  bonds  issued  for  transit  loans  was 
about  3.80,  and  that  the  rental  of  the  Tremont  Street  sub- 
way for  a long  period  was  4|,  that  the  rental  for  the  Cam- 
bridge connection  is  4|,  while  the  consolidated  lease  will  be 
on  a 4|  per  cent  basis.  This  was  a gross  difference  between 
3.80  and  4.50,  and  whatever  contribution  the  Tremont  Street 
subway  and  Beacon  Hill  connection  have  made  help  toward 
that  sinking  fund  and  help  to  amortize  those  bonds  when 
they  come  due. 

Mr.  Matthews.  Giving'  full  weight  to  everything  you 
say,  you  will  find  if  you  investigate,  I am  very  confident, 
that  the  present  deficit  is  $196,000,  and  will  be  increased  to 
$250,000  next  year,  as  soon  as  the  Dorchester  tunnel  is  com- 
pletely financed. 

Commissioner  Ellis.  Does  that  have  any  other  effect 
than  to  postpone  the  time  for  amortization  of  the  loan? 

Mr.  Matthews.  No,  but  instead  of  a forty  or  forty-five 
year  loan,  it  will  be  seventy-five  or  eighty;  and  what  will  be 
the  value  of  the  subway  at  that  time?  Moreover,  it  is  a 
departure  from  the  understanding  of  the  community  at  the 
time  these  subway  enteri)rises  were  promoted,  when  it  was 
understood  that  the  least  that  the  city  would  get  from  fur- 
nishing capital  and  losing  taxes,  which  it  would  get  each  year 
if  the  subways  were  financed  by  private  cor})orations,  was 
that  at  the  end  of  the  term,  a reasonably  long  term,  forty  or 


1917.] 


HOUSE  — No.  1875. 


225 


forty-five  years,  the  city  would  have  the  subways  free  of 
cost.  That  was  the  trade,  and  it  ought  not  to  be  changed 
now  unless  there  is  urgent,  overwhelming  necessity.  And 
there  is  none. 

Commissioner  Quincy.  You  don’t  mean  that  this  deficit 
is  now  included  in  any  tax  levy? 

Mr.  Matthews.  It  is  made  up  from  taxes,  or  it  is  not 
made  up,  which  is  worse. 

Commissioner  Quincy.  Which  is  the  fact? 

Mr.  Matthews.  I think  it  is  in  the  taxes. 

Commissioner  Quincy.  Do  you  think  this  is  included  in 
the  taxes  now? 

Mr.  Matthews.  I think  it  is  both  ways.  I think  some 
of  it  is  included  in  taxes  and  some  is  not;  but  if  it  is  not 
included  in  taxes  it  is  all  the  worse  because  that  means  it 
is  accumulating,  and  no  provision  for  amortization  of  the 
bonds. 

Commissioner  Quincy.  As  a matter  of  policy  which  w^ay 
do  you  think  it  ought  to  be  dealt  with?  If  there  is  this 
recurring  deficit,  that  in  order  to  maintain  the  policy  of 
Boston  pursued  in  respect  to  all  other  loans,  or  providing  an 
adequate  sinking  fund  to  meet  loans  at  maturity,  that  year 
by  year  the  deficit  should  be  added  to  the  taxes  and  placed 
in  the  sinking  fund? 

Mr.  Matthews.  Very  clearly  so.  Whether  these  loans 
are  regarded  as  aid  to  a private  corporation,  or  whatever 
view  you  take,  we  should  get  our  money  back. 

Commissioner  Quincy.  In  other  words,  the  city  should 
be  prepared  to  meet  all  subway  bonds  at  maturity,  exactly 
as  it  meets  all  other  loans  at  maturity? 

Mr.  Matthews.  I think  so,  and  the  corollary  of  that 
proposition  is  that  they  should  be  reimbursed  to  the  city  by 
the  company  which  gets  the  benefit  of  our  capital  expendi- 
tures, which  is  the  original  theory  of  all  this  subway  promo- 
tion in  this  community. 

Commissioner  Quincy.  That  was  the  original  theory. 
Now,  taking  the  situation  as  it  stands,  what  ought  to  be 
done  about  it?  You  cannot  ask  the  company  to  go  to  a 
basis  higher  than  4|  per  cent,  now  that  they  have  signed  the 
lease? 


226 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Matthews.  If  the  contract  is  good  for  them,  it  is 
good  .for  us,  and  we  ought  not  to  have  the  deficit  increased. 
But  answering  your  question  on  the  side,  I will  agree  with 
you  entirely.  But  there  ought  not  to  be  an  annual  deficit, 
and  it  ought  to  be  made  good  from  some  source  as  it  accrues. 

Commissioner  Eastman.  If  the  Elevated  Company  had 
built  the  subways  and  issued  bonds,  it  would  not  need  any 
sinking  fund  at  all.  It  would  depend  on  its  ability  to  re- 
place the  bonds  when  they  become  due.  Why  is  the  situa- 
tion different  with  the  city  of  Boston? 

Mr.  Matthews.  I am  not  prepared  to  say  that  there  is 
any  difference.  I am  not  prepared  to  say  that  a private 
company  entering  upon  an  enterprise  of  this  kind,  covering 
half  a century  or  more,  should  not  make  some  provision  in 
case  the  whole  thing  may  be  worthless  at  the  expiration  of 
the  debt.  But  they  would  not  bond  them  all.  Some  would 
be  paid  for  by  private  capital.  That  is  the  reason  they 
differ.  The  city  wa,s  asked  to  take  the  risk  in  the  o'riginal 
subway  contract,  and  they  took  the  risk  upon  terms  solemnly 
entered  into  and  approved  by  public  vote.  And  those  terms 
should  not  now  be  changed  unless  there  is  some  overwhelm- 
ing, pressing  necessity  for  it,  and  I cannot  see  any. 

There  is  another  thing  that  I have  not  referred  to.  The 
city  is  not  only  paying  8250,000  a year  more  than  the  rent, 
but  it  is  losing  its  share  of  the  taxes  which  would  be  paid 
by  the  Elevated  if  these  subways  had  been  built  by  it. 
That  is  an  indirect  payment.  It  is  a loss  rather  than  an 
actual  payment.  It  is  on  the  negative  side  rather  than  the 
positive  side  of  our  expenditures.  But  it  is  there,  and  as 
contrasted  with  private  ownership  there  is  a loss  to  the  com- 
munity by  financing  those  securities  at  i)ublic  ex])ense. 

Commissioner  Quincy.  Do  you  think  it  fair  to  assume, 
■Mr.  Matthews,  that  the  Elevated  road  could  or  would  have 
built  the  subway  system  as  it  now  exists  if  the  public  had 
not  done  so? 

Mr.  Matthews.  No,  I do  not.  I think  they  might  well 
have  declined  to  go  into  some  of  thesy  extensions,  and  the 
])ublic  might  well  have  decline<l  to  sanction  them.  I am  not 
here  to  sanction  everything  that  has  been  done  in  subway 


1917.] 


HOUSE  — No.  1875. 


227 


construction.  Far  from  it.  I think  they  have  done  too 
much.  Right  here,  I think  I should  like  to  dispose,  so  far  as 
I can  at  the  present  moment,  of  the  one  precedent  which  is 
cited  for  the  contribution  by  the  public  to  subway  operation, 
and  that  is  the  celebrated  New  York  subway  contract,  which 
I was  surprised,  being  somewhat  familiar  with  its  history, 
especially  its  political  history,  — I was  somewhat  surprised 
to  see  two  pages  in  my  Krother  Snow’s  brief  devoted  to  a 
laudation  of  that  contract.  In  many  of  its  features  it  is 
probably  the  most  extraordinary  contract  ever  entered  into 
by  men  in  public  office  in  any  city  or  State  in  the  country. 
It  was  wholly  indefensible  and  never  would  have  been 
adopted  if  submitted  to  popular  vote,  and  it  was  the  subject 
of  scandal,  the  echo  of  which  has  not  yet  ceased,  and  I 
should  earnestly  trust  that  nothing  of  the  sort  would  be 
tolerated  in  this  community,  and  that  no  attention  would  be 
paid  to  that  particular  precedent.  No  worse  precedent  could 
be  cited,  and  that  is  the  only  one,  the  only  precedent  for  the 
contract  between  the  city  and  a private  company,  by  which 
the  city’s  interest  is  subordinated  to  that  of  the  stockholders 
of  the  company. 

I have  written  to  New  York  for  some  facts  and  figures 
respecting  the  New  York  subway  contract  and  I have  not 
got  them  yet.  When  they  come  I am  going  to  embody  the 
result  in  a memorandum  which  I will  furnish  to  the  chairman 
of  this  Commission  if  it  is  still  in  session. 

In  the  meantime,  I will  read  a line  received  from  the  only 
member  of  the  Public  Service  Commission  for  the  State  of 
New  York,  First  District,  whose  reputation  has  survived. 
It  is  Mr.  Milo  R.  Maltby.  “I  certainly  hope  Boston  will 
not  pattern  after  New  York,  because  New  York  is  going  to 
regret  this  contract,”  et  cetera. 

I hope  to  be  able  to  furnish  more  exact  figures  concerning 
that  contract  than  are  now  at  my  disposal. 

I have  been  told  that  the  last  municipal  election  in  New 
York  turned  upon  this  contract.  I do  not  feel  quite  certain 
about  that,  but  I expect  to  be  in  position  to  make  that  state- 
ment if  it  is  true,  and  with  some  detail.  That  is  the  only 
precedent  there  is  for  what  is  asked  for  from  the  Common- 


228 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


wealth  in  this  instance.  And  before  passing  from  that 
contract,  let  me  call  attention  to  something  not  suggested  in 
my  Brother  Snow’s  brief.  It  is  a very  able  document,  but 
after  giving  two  pages  to  this  contract  and  saying  that  it 
might  be  applicable  to  this  situation,  you  would  have  sup- 
posed that  he  might  have  put  in  two  lines  to  show  you  how 
it  differed. 

The  New  York  contract  was  a special  contract,  to  meet  a 
special  situation  for  subway  construction,  with  a specific 
rental,  with  specific  stock  issues,  and  everything  of  that  kind. 
There  is  no  such  proposition  before  the  public  here  to-day. 
The  first  time  when  any  further  contribution  by  the  city  of 
Boston,  in  excess  of  the  large  amounts  now  annually  made, 
is  proposed,  looking  to  the  city  of  Boston  for  aid,  it  should 
be  undertaken  only  when  somebody  comes 'forward  to  pro- 
mote some  new  specific  subway  construction.  So  that  if  you 
apply  the  principle  of  the  New  York  subway  contract  to  the 
present  situation,  you  are  not  applying  it  to  the  same  situa- 
tion which  they  had  in  New  York  at  all.  That  is  another 
answer  to  any  weight  which  you  may  attach  to  any  possible 
application  which  you  may  attempt  to  make  of  the  New 
York  contract  here  now. 

I am  not  one  of  those  who  would  disregard  entirely  the 
community  benefit  through  cheap  transportation.  My  record 
should  protect  me  from  any  such  criticism.  This  community 
would  not  have  had  the  present  subway  system,  nor  any  of 
these  radial  boulevards,  if  it  had  not  been  for  deliberate 
effort  of  my  own,  followed  by  considerable  political  unpopu- 
larity in  consequence,  in  behalf  of  schemes  believed  to  be 
needed  in  order  to  disperse  the  population  in  this  district. 
They  have  had  that  effect  more  or  less.  I think  it  is  easy 
to  see  the  effect  of  community  transportation  in  this  present 
system  of  transit. 

The  streets  were  laid  out  in  this  city  and  the  subways 
built  to  accom])lish  that  end,  and  I do  not  regret  the  part 
which  I took  in  that  direction.  There  is  such  a thing  as  the 
community  going  transportation  mad,  and  there  is  danger,  if 
a halt  is  not  called  some  day,  that  this  great  system  will 
become  so  overgrown  as  to  be  a ])erj)etual  load  upon  stock- 


1917.] 


HOUSE  — No.  1875. 


229 


holders  and  adversely  affect  the  patrons  in  increase  of  fares, 
or  the  community  in  its  city  treasury. 

If  the  time  comes,  and  I am  not  prepared  to  say  that  it 
will  not,  when  you  find  yourself  face  to  face  with  the  neces- 
sity of  either  increasing  fares  or  spreading  among  the  com- 
munity some  of  the  cost  of  this  system,  — I won’t  admit  that 
you  must  consider  the  question  now,  — but  if  this  or  some 
other  community  has  occasion  to  do  so,  you  may  take  these 
considerations  into  account.  But  they  should  not  be 
exaggerated. 

Here  is  another  argument  which  applies  to  this  situation, 
that  whatever  change  is  made  ought  to  be  made  on  metro- 
politan lines.  The  whole  cost,  which  is  $196,000  now, 
$250,000  next  year,  falls  on  the  city  of  Boston.  But  the 
benefit,  if  there  be  a benefit,  and  I think  there  is  some, 
although  it  may  be  easily  exaggerated,  probably  inures  to  most 
of  the  eleven  other  communities  outside  the  city  proper  who 
are  served  by  the  Boston  Elevated  Railway  Company,  and 
they  don’t  pay  one  cent.  That  is  not  a fair  situation. 

If  you  want  to  treat  this  problem  on  the  basis  of  com- 
munity betterments,  and  I am- not  prepared  to  say  that  it 
should  not  be  so  considered  at  some  time,  you  may  do  it; 
but  if  you  continue  the  burden  on  the  city  of  Boston  alone, 
then  there  should  be  no  interference  with  the  subway  rentals. 

Commissioner  Macleod.  According  to  the  statement 
made  by  Mr.  Sullivan  here  to-day,  the  city  of  Boston  now 
enjoys  a surplus  of  something  like  $3,500,000,  as  against  an 
outstanding  cumulative  deficit  of  about  $58,000.  If  those 
figures  are  correct,  it  would  seem  to  indicate  that  the  sub- 
ways have  been  a financial  asset,  rather  than  a financial 
burden  to  the  city  of  Boston,  and  on  that  ground  the  Mayor 
of  Boston  was  very  pronounced  in  opposition  to  any  plan 
which  contemplated  taking  the  control  of  the  subways  from 
the  city  and  vesting  them  in  any  metropolitan  board. 

Mr.  Matthews.  I can  only  say  as  to  the  $58,000,  the 
alleged  deficit,  that  it  may  be  the  cumulative  deficit  of  the 
past.  It  is  accumulating,  however,  now  at  the  rate  of 
$250,000  a year.  But  as  to  the  $3,000,000  surplus,  I cannot 
see  it. 


230  BOSTON  ELEVATED  RAILWAY.  [INIar. 

We  paid  the  first  cost  of  the  subway;  we  have  very  little 
to  say  about  that,  and  we  don’t  have  any  way  of  — 

Commissioner  Macleod.  That  deficit  of  $58,000  comes 
about  through  the  accumulations  of  the  sinking  fund. 

Mr.  Matthews.  Then  I would  dispute  it  because  the 
accumulations  of  the  sinking  fund  are  given  full  weight  in  the 
calculation  which  I presented  to  you.  The  requirements  of 
the  future  are  reduced,  if  there  is  an  accumulation  in  the 
sinking  fund. 

Commissioner  Noyes.  It  is  certainly  unfortunate  that 
there  should  be  this  discrepancy,  because  Mr.  Sullivan  said 
he  came  directly  from  the  city  auditor. 

Mr.  Matthews.  Well,  if  you  look  at  his  statement,  you 
may  discover  where  it  is. 

Commissioner  Noyes.  I say  it  is  difiicult  for  the  Commis- 
sion to  determine  it. 

Mr.  Matthews.  It  is  difficult  for  me,  too.  I have  not 
seen  them  both.  I think  thirty  seconds  with  Mr.  INIitchell 
would  explain  the  difference.  Mr.  Mitchell’s  figures  are 
right,  but  you  must  understand  what  they  mean.  I have 
every  confidence  in  his  figures,  whether  plus  or  minus,  but  I 
want  to  know  what  it  means.  He  may  be  asked  to  give  a 
figure  which  sounds  very  well,  but  have  nothing  to  do  with 
the  problem.  For  instance,  this  $3,000,000  of  surplus  which 
]Mr.  Quincy  mentioned,  is  taken  care  of  in  the  computation. 
Our  sinking  funds  are  calculated  by  the  year.  The  only 
chance  for  that  surplus  might  be  through  the  method  which 
is  pursued,  but  that  was  changed  some  years  ago,  and  I am 
very  certain  that  full  credit  is  given  to  the  sinking  fund  sur- 
plus, if  there  is  any,  in  the  deficit  statement  which  I have 
given  to  you. 

So  much  for  the  question  of  increased  revenue.  The  com- 
pany makes  out  a case  for  a temporary  increase,  but  that  is 
no  reason.  Simply  to  permit  the  stockholders  of  a private 
corporation  to  increase  its  dividends  to  5^  or  6 per  cent  for  a 
number  of  years,  is  no  reason  for  such  a change  in  a contract 
fairly  entered  into  between  the  parties. 

The  other  needs  of  the  Elevated  road  are  grouped  by  the 
company,  — the  alleged  needs  of  the  Elevated  road.  It 


1917.] 


HOUSE  — No.  1875. 


231 


seems  to  me  unmistakable  that,  owing  to  the  financial  con- 
dition of  the  company,  it  cannot  get  any  more  money  for 
equipment  or  expenditures  on  capital  account.  Our  sugges- 
tion there  is  to  grant  the  company’s  requests,  — two  of 
them,  — namely,  release  the  $500,000  deposit  which  certainly 
is  not  needed,  and  authorize  the  State  or  suggest  that  the 
State  take  over  the  Cambridge  subway.  The  $500,000 
would  be  immediately  available.  If  a bill  was  passed  early 
in  January,  it  would  give  enough  to  equip  the  Dorchester  tun- 
nel, according  to  the  road’s  own  figures,  and  if  the  Legislature 
then  will  take  up  the  other  proposition,  — it  cannot  be  passed, 
of  course,  before  the  close  of  the  session,  — that  can  be  financed 
by  the  State  directly,  or  on  emergency  lines,  the  choice  being 
something  for  you  to  work  out  and  solve,  the  best  you  can. 

That  would  give  the  company  between  $9,000,000  and 
$10,000,000  in  cash,  enough. to  carry  it  on  for  the  next  nine 
or  ten  years,  and  is  all  that  they  may  reasonably  need. 

Commissioner  Quincy.  Do  you  think,  Mr.  Matthews, 
that  it  would  be  sound  in  principle  or  expedient  in  practice 
for  the  Commonwealth  directly,  and  not  through  the  or- 
ganization of  a metropolitan  district,  to  go  into  the  business 
of  owning  transportation  facilities,  such  as  owning  the  sub- 
way in  Cambridge? 

Mr.  IMatthews.  I should  be  inclined  to  shrink  from  that 
alternative.  It  seems  to  me  this  is  a metropolitan  question, 
and  the  way  to  treat  it  is  like  a metropolitan  water  works  or 
parkway.  In  that  way  you  can  ascertain,  if  it  is  possible  to 
do  so,  what  the  relative  benefit  of  the  system  is  among  these 
different  communities,  and  adjust  the  annual  charges  ac- 
cordingly. 

Commissioner  Macleod.  Isn’t  the  most  direct  and  obvious 
purchaser  for  the  Cambridge  subway  the  city  of  Cambridge? 

Mr.  Matthews.  I don’t  know  whether  the  city  of  Cam- 
bridge wants  to  do  it  or  not. 

Chairman  Macleod.  I don’t  know  whether  they  want  to 
or  not. 

Mr.  Matthews.  If  they  want  to,  I should  say  that  was 
a simple  remedy  by  all  means.  If  they  don’t  want  to,  I 
suggest  that  the  State  buy  it  temporarily,  pending  a thor- 


232 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


ough  consideration  of  this  whole  question  in  its  metropolitan 
aspects,  with  the  idea  that  in  a year  or  two  the  cost  of  the 
Cambridge  subway  should  be  added  to  the  cost  of  the  Boston 
subways  and  the  whole  re-financed  on  metropolitan  lines. 

Commissioner  Quincy.  You  would  have  no  objection  to 
the  taking  over  of  the  whole  Boston  system  of  subways  by  a 
properly  constituted  State  authority,  who  would  also  acquire 
the  Cambridge  subway,  would  you? 

Mr.  Matthews.  Personally? 

Commissioner  Quincy.  Personally. 

Mr.  Matthews.  None  whatever.  I do  not  see  how  there 
can  be  objection  to  that.  I don’t  know  whether  the  memory 
of  many  of  those  present  goes  back  to  1894,  but  this  subway 
system  was  not  begun  as  a proprietary  enterprise  on  the  part 
of  the  city  of  Boston.  It  was  begun  because  we  felt  we 
had  to  have  it,  and  there  was  nobody  else  to  do  it.  We 
took  our  chances  without  a lease,  and  the  first  lease  signed 
is  the  only  profitable  one  that  has  been  signed,  which  brings 
in  any  considerable  profit  above  the  sinking  fund  require- 
ments. But  if  anybody  had  suggested  at  that  time  that  we 
should  have  the  subway  system  constructed  on  the  metro- 
politan account,  there  would  have  been  no  objection  to  it  at 
all  by  me  or  those  responsible  for  the  adoption  of  the  system 
by  the  passage  of  the  first  act. 

Commissioner  Eastman.  You  say  you  think  the  needs  of 
the  situation  may  be  taken  care  of  by  providing  new  capital. 
Certain  needs  may  arise  where  the  capital  is  to  be  supplied 
by  the  city.  Eor  instance,  the  possible  construction  of  a 
new  subway  station  at  x\rlington  Street,  which  the  Elevated 
has  refused  to  accept  under  the  proposed  terms.  The  fact 
that  it  had  capital  would  not  make  the  company  any  more 
willing  to  accept  the  burden  in  the  shape  of  a lease? 

Mr.  jVIatthews.  On  that  matter  my  sym])athies  are  en- 
tirely with  the  company.  In  the  matter  of  Arlington  Street 
station,  I see  no  sense  in  it  whatever,  and  I should  be  bene- 
fited by  it  if  there  was  any  benefit  in  such  an  arrangement. 
I think  the  com])any  is  right.  But  wait  until  a subway  ])ro])- 
osition  is  ])romoted  before  the  Legislature,  ajul  then  see  what 
has  to  be  done  iji  the  judgmejit  of  the  city  and  the  members 


1917.] 


HOUSE  — No.  1875. 


233 


of  the  Legislature.  I don’t  see  why  any  subway  legislation 
should  be  anticipated  by  this  Board.  I don’t  see  why  the 
company  or  its  patrons  have  got  any  right  to  ask  now  for  the 
remission  of  any  of  their  taxes,  rentals,  or  anything  they  are 
paying  by  reason  of  prospective  development  of  the  subway 
system. 

Senator  Bates.  You  don’t  think  that  the  municipal 
ownership  of  subways  and  transportation  facilities  has  been 
a success,  do  you? 

Mr.  Matthews.  Well,  I have  devoted  odd  intervals  in 
the  last  twenty  years  to  that  point  of  view. 

Senator  Bates.  And  yet  you  advise  it  for  the  city  of 
Cambridge? 

Mr.  Matthews.  No,  I don’t  say  that.  I was  asked  if  the 
city  of  Cambridge  would  do  it,  and  I said  I did  not  know. 
If  I lived  there  I should  hesitate.  This  subway  system  is  a 
tremendous  burden  at  the  present  time.  It  is  some  good,  but 
when  you  contrast  the  burdens  with  the  benefits,  I am  not  at 
all  certain  which  way.  you  would  come  out.  Taking  the 
original  subway  system,  the  situation  is  very  different. 

Now,  just  one  word  in  conclusion,  gentlemen.  It  seems  to 
me  in  substance  that  no  change  in  property  taxes  or  rents 
should  be  made  at  the  present  time,  nor  at  any  time  except 
as  a last  resort;  that  if' made,  they  should  be  made  only  with 
reference  to  specific  new  subways,  deliberately  promoted  and 
specifically  authorized  by  law;  that  they  should  only  be  al- 
lowed after  a full  investigation,  as  part  of  a readjustment  of 
the  whole  subway  situation  on  metropolitan  lines,  and  subject 
to  a referendum  to  the  people  of  Boston  or  the  metropolitan 
district,  as  the  case  may  be. 

If  you  do  anything  else,  Mr.  Chairman,  what  are  you  going 
to  do?  You  will  convert  the  most  promising  experiment  in 
public  ownership  that  was  ever  undertaken  in  this  country. 
It  was  new  here.  The  political  memories  of  most  of  those 
present  do  not  go  back  that  far.  It  was  regarded  as  revolu- 
tionary, and  practically  every  tax  payer  voted  against  it. 
It  was  only  carried  by  small  majority  at  the  city  election.  It 
was  intended  as  a demonstration  of  what  could  be  done  by  a 
fair,  sensible  proposition  of  public  ownership. 


234 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


If  you  pass  any  one  of  these  propositions  you  will  make 
that  thing  ridiculous.  It  will  be  regarded  by  those  who  be- 
lieve in  public  ownership,  and  by  those  who  believe  in  public 
ownership  as  a last  resort,  as  an  infamous  surrender.  That  is 
my  final  word  on  that  question.  You  have  no  right  to  do  it, 
no  right  in  your  own  interest  as  members  of  public  boards  in 
this  Commonwealth,  no  right  as  citizens  of  Boston,  and  as  re- 
sponsible citizens,  no  right  if  you  have  any  regard  whatever 
for  the  public  to  undertake  the  management  of  great  enter- 
prises of  this  sort  upon  sensible  lines  by  public  ownership. 
This  scheme,  even  to  the  small  degree  in  which  it  is  now  sug- 
gested, is  by  an  inversion  pro  tanto  to  municipal  ownership, 
and  it  is  turning  the  whole  theory  and  practice  of  municipal 
economy  upside  down  and  inside  out.  And  I cannot  for  a 
moment  believe  that  any  public  board  will  recommend  it  ex- 
cept after  a most  careful  consideration,  after  the  rejection  of 
everything  else,  and  I shall  apprehend  that  no  Legislature  in 
the  exercise  of  common  sense  would  sanction  it,  no  governor 
would  sign  the  bill,  and  no  popular  vote  would  support  it. 
I hope  it  will  not  be  done,  and  I take  this  stand  without  any 
feeling  of  hostility  to  the  Boston  Elevated,  with  the  full 
recognition  of  the  difficulties  which  those  gentlemen  are 
called  upon  to  face  and  have  been  called  upon  to  face,  but  as 
everything  as  now  contemplated  is  only  temporary,  and  also 
with  the  belief  that  this  is  perhaps  the  only  board  of  direc- 
tors of  a public  service  transportation  company  which  has 
been  operating  in  this  vicinity  in  the  past  twenty  years  which 
has  attempted  to  do  its  duty. 

Commissioner  Stone.  You  spoke  in  the  first  part  of  your 
remarks  about  the  company  having  charged  off  enough  to 
take  care  of  depreciation. 

Mr.  Matthews.  That  is  a suspicion  of  mine. 

Commissioner  Stone.  Have  you  Riken  into  consideration 
that  in  future  they  ought  to  charge  more  for  depreciation? 

Mr.  Matthews.  I think  they  ought  to.  I think  they 
should  get  it  from  increased  fares.  I think  they  should  have 
more.  The  company  does  Jiot  lose  that;  they  get  it  back  in 
increased  capitid. 

Commissioner  Stone.  In  making  uj)  the  figures  which  you 
have  given,  have  you  allowed  for  that? 


1917.] 


HOUSE  — No.  1875. 


235 


Mr.  Matthews.  No,  I took  the  figures  given  by  the 
company  themselves. 

Commissioner  Stone.  Just  as  they  were  last  year? 

Mr.  Matthews.  Well,  the  figures  given  in  the  brief.  I 
suppose  those  are  last  year’s  figures.  I took  the  deprecia- 
tion they  said  they  would  have  and  the  amount  of  increased 
depreciation  which  they  ought  to  have.  My  guess  is  that 
'they  can  put  a lot  more  into  depreciation  than  that,  and  I 
think  they  will  come  to  that  conclusion  before  long. 

Commissioner  Noyes.  Following  the  same  line  as  Mr. 
Stone,  it  would  be  a fair  presumption  that  the  company,  if  it 
is  properly  managed,  or  properly  performs  its  function  as  a 
public  agent,  will  be  in  position  to  earn  enough  to  charge  off 
proper  depreciation.  Isn’t  that  the  fact,  that  they  should  be 
in  position  to  charge  off  depreciation,  and  then  pay  their 
stockholders? 

Mr.  Matthews.  Yes,  and  the  sooner  the  directors  of 
a public  service  corporation  realize  what  depreciation 
amounts  to,  the  sooner  they  have  the  courage  to  say  they 
have  got  to  have  it  from  the  public,  and  the  sooner  the 
public  gives  it  in  fares,  the  better  it  will  be,  because  then  the 
companies  will  be  solvent  for  the  first  time.  I won’t  say  that 
the  Elevated  is  not,  but  the  others  may  not  be.  No  such 
arrangement  should  be  made  by  the  city.  If  it  is  proper 
and  competent  to  charge,  the  city  of  Boston  must  first  con- 
sent to  it  by  the  expression  of  its  voters  at  the  polls,  and  in 
no  other  way,  because  that  is  the  way  it  was  first  adopted. 
If  it  is  proper  to  charge  it  as  part  of  the  cost  of  carrying  on 
the  operations,  as  part  of  the  benefit  of  it,  which  should  we 
choose?  Are  not  the  railroads  of  more  consequence  to  this 
vicinity  than  the  subway  system?  If  there  is  any  logic  in  it, 
it  should  apply  with  far  more  force  to  the  New  Haven  Rail- 
road, the  incapacity  of  which  was  due  to  financial  misman- 
agement and  which  is  a serious  handicap  to  this  community. 
It  applies  to  the  Boston  & Maine  and  to  every  railroad  cor- 
poration with  an  infinitely  greater  bearing  than  to  any  subway 
situation.  And  yet  it  is  proposed  to  upset  municipal  owner- 
ship for  the  least  necessary  of  these  three  enterprises.  Does 
any  one  else  desire  to  ask  any  question?  I am  very  much 


236 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


obliged,  Mr.  Chairman,  for  the  courtesy  which  you  have 
shown  me.  I do  not  know  that  I have  added  anything 
to  what  was  submitted  in  the  brief,  but  I am  very  much 
obliged  just  the  same. 

Commissioner  Macleod.  Mr.  Matthews,  may  I ask  you 
one  question? 

Mr.  Matthews.  ' Certainly. 

Commissioner  Macleod.  Taking  the  statement  of  the* 
company  as  it  was  presented  here,  do  you  believe  that  any 
reason  is  shown  for  the  present  increase  in  fares? 

Mr.  Matthews.  At  once? 

Commissioner  Macleod.  Yes. 

Mr.  Matthews.  No,  but  I think  it  is  coming,  though.- 

Commissioner  Macleod.  Do  you  think  that  if  that  is 
coming  and  is  likely  to  come,  that  this  Commission  ought  to 
deal  with  that,  even  at  this  time? 

Mr.  Matthews.  I think  I can  only  repeat  what  Mr. 
Bangs  and  I said,  in  type,  that  that  is  a question  which  is 
facing  the  community  and  the  company  and  the  stockholders, 
and  there  is  no  question  about  it,  and  it  ought  to  be  very 
thoroughly  considered  before  any  action  is  taken.  If  this 
Board  has  got  the  time,  we  hope  it  will  do  it,  and  if  it  has 
not,  we  hope  the  Board  will  have  the  courage  to  say  so. 
The  Legislature  has  an  offhand,  pleasant,  gentlemanly  sort 
of  way  of  turning  these  over  to  special  commissions,  and 
then  from  October  to  January  it  expects  a ready-made  con- 
clusion on  most  important  economic  questions.  If  it  cannot 
be  done,  then  it  cannot  be;  and  the  important  thing  to  be 
done  is  to  say  so. 

Commissioner  Stone.  I understood  you  to  say  you 
thought  the  community  had  gone  subway  mad. 

Mr.  IMatthews.  I think  it  has  gone  transportation  ma.l. 

Commissioner  Stone.  What  is  there  that  makes  you 
think  so?. 

]Mr.  Matthews.  I am  very  doubtful  about  this  Dor- 
chester tunnel.  I am  not  sure  that  it  is  not  a good  thing, 
but  1 am  doubtful  about  it. 

Senator  Bates.  The  trouble  is  it  don’t  go  far  enough. 

Mr.  Matthews.  That  may  be  the  reason.  But  if  you 


1917.] 


HOUSE  — No.  1875. 


237 


will  look  in  other  cities  you  will  find  that  the  subways  go 
along  the  main  line  of  travel,  and  not  solely  for  suburban 
development.  I sometimes  suspect  that  some  of  these  sub- 
ways have  been  insisted  on  and  authorized  with  that  end  in 
view.  I do  not  criticise  the  subway  so  much  as  it  now  is, 
so  long  as  the  people  understand  what  it  is  really  costing  the 
community,  which  is  a great  deal  more  than  it  was  contem- 
plated at  the  outset,  and  so  long  as  there  is  no  disposition  to 
increase  it. 

The  Lieutenant-Governor.  I am  not  sure  whether  you 
want  to  leave  the  impression  that  at  the  present  time  the 
income  of  the  Boston  Elevated  is  sufficient  to  meet  the 
reasonable  charges  for  operation  and  meet  depreciation  and 
interest  on  investment. 

Mr.  Matthews.  I said  I thought  it  would  be,  after  three 
years ; that  there  will  he  a deficit  — 

The  Lieutenant-Governor.  But  there  is  not  now? 

Mr.  Matthews.  I think  there  is. 

The  Lieutenant-Governor.  You  mistrust  that  there  is 
a deficit  as  to  depreciation? 

Mr.  Matthews.  That  is  in  addition,  I might  say,  to 
anything  that  the  company  is  claiming,  and  that  is  a general 
statement  merely  based  on  their  balance  sheet.  I take  it 
that  their  assets  represent  the  first  cost  of  their  property. 
That  is  the  common  way.  If  I am  wrong  my  whole  suspicion 
disappears  at  once.  And  when  I say  ‘^suspicion”  I do  not 
use  it  in  an  offensive  sense  at  all. 

Commissioner  Noyes.  I think  they  told  me  that  they 
have  not  charged  off  depreciation. 

Mr.  Matthews.  I think  there  is  no  question  about  the 
facts.  They  could  have  properly  asked  the  public  to  pay, 
more,  and  the  public  ought  readily  to  have  paid  it,  and  have 
those  extra  fares  put  into  a fund  which  would  be  used  for 
construction,  and  would  cover  depreciation,  and  being  used 
for  construction  would  reduce  the  capital  expenditures  of  the 
company. 

Commissioner  Allen.  1 understand  you  to  say  that  at 
the  present  time  this  Commission  should  do  nothing? 


238 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Matthews.  No,  I say  you  should  do  nothing  unless 
you  are  prepared  to  take  up  this  whole  question  of  fares. 

Commissioner  Allen.  After  investigation,  you  mean,  but 
at  the  present  time  it  should  do  nothing? 

Mr.  Matthews.  No,  I don’t  say  that. 

Commissioner  Allen.  I thought  it  was  agreed  that  that 
would  take  a long  time  to  investigate. 

Mr.  Matthews.  I don’t  know  whether  it  will  or  not. 
You  have  been  on  the  Commission  for  a couple  of  months, 
and  may  think  you  could  put  that  investigation  through, 
and  if  so,  for  heaven’s  sake,  do  it. 

Commissioner  Allen.  It  would  have  to  be  something 
that  would  be  completed  and  before  the  Commission,  before 
the  fifteenth  day  of  January. 

Mr.  Matthews.  Yes. 

Commissioner  Allen.  And  if  we  cannot  do  it  in  that 
time,  that  we  should  take  no  other  action? 

Mr.  Matthews.  No.  I should  recommend  the  relief  of 
the  8500,000  and  that  the  State  buy  the  Cambridge  subway 
and  put  it  into  suspense  account  for  the  present,  pending 
a complete  reconstruction  of  the  whole  arrangement. 

Commissioner  Allen.  I understood  you  to  say  that  the 
Elevated  should  have  taken  this  matter  up  five  years  ago. 

]\Ir.  Matthews.  That  is  the  only  criticism,  that  they  did 
not  face  the  situation  five  years  ago. 

Commissioner  Allen.  If  the  situation  has  been  growing 
worse  for  five  years,  why  do  you  say  to  this  Commission, 
Do  nothing  now;  the  time  is  not  ripe,  that  they  should  have 
done  it  five  years  ago? 

Mr.  Matthews.  I don’t  say  that  the  time  is  not  ripe  for 
the  thorough  consideration  of  this  question  in  its  social, 
financial  and  economic  aspects. 

Commissioner  Allen.  So  far  as  this  Commission  goes, 
you  mean? 

Mr.  Matthews.  The  only  trouble  with  the  Commission 
is  its  limited  time.  No,  I say  this  is  the  time  to  consider  and 
reconstruct  these  entire  })roblems. 

Commissioner  Allen.  Not  before  the  15th  of  January? 


1917.] 


HOUSE  — No.  1875. 


239 


Mr.  Matthews.  I don’t  want  to  be  understood  as  advo- 
cating an  indefinite  postponement  of  this  situation,  or  its 
solution.  I want  to  see  it  taken  up  and  settled  as  soon  as  it 
can  be  done.  If  this  Commission  can  do  it,  well  and  good; 
so  much  the  better.  If  it  cannot,  my  parting  suggestion 
is,  — Don’t  be  afraid  to  say  so,  and  get  an  extension  of 
time.  Commissions  heretofore  have  said  that  they  would  do 
nothing,  because  they  were  afraid  to  tell  the  Legislature  that 
they  were  physically  unable  to  do  what  the  Legislature  told 
them  to  do.  I hope  this  Commission  has  more  courage. 

Commissioner  Allen.  The  urgency  of  this  matter  will  be 
affected  to  a considerable  extent  by  the  correctness  of  the 
assumption  that  the  company,  after  the  payment  of  operating 
expenses  and  fixed  charges,  and  a proper  amount  for  depre- 
ciation and  dividends,  will  be  on  a sound  basis  in  about  three 
years  from  this  time.  That  is  to  say,  if  we  find  on  investiga- 
tion that,  making  proper  allowance  for  depreciation,  that 
that  result  will  not  be  achieved,  within  that  period  of  time, 
and  cannot  be  achieved  for  an  indefinite  period  in  the  future, 
would  not  that  constitute  a present  condition  which  would 
justify  action  on  the  part  of  this  Commission  if  they  ever 
reach  this  conclusion,  as  to  what  ought  to  be  done? 

Mr.  Matthews.  I think  it  would,. provided  this  Commis- 
sion, before  the  15th  of  January,  can  fairly  make  up  its 
mind  on  the  complicated  aspect  of  all  these  different  prob- 
lems. I hope  it  can. 

Commissioner  Allen.  I suppose  it  is  possible  to  present 
a report  this  year  at  some  later  date  than  the  15th  of 
January. 

Mr.  Matthews.  You  can  get  three  months  more  and  I 
think  that  would  be  time  enough.  I think  if  there  is  an  in- 
vestigation it  ought  to  be  completed  within  the  next  five  or 
six  months  by  any  intelligent  board,  especially  by  this  board. 

The  Lieutenant-Governor.  When  can  you  be  ready  to 
be  heard,  Mr.  Snow? 

Mr.  Snow.  Either  Thursday  or  Friday,  if  it  is  convenient 
for  the  Commission;  possibly  Friday. 

The  Lieutenant-Governor.  Can  you  meet  Thursday  at 
10.30? 


240 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Snow.  Yes. 

The  Lieutenant-Governor.  The  hearing  will  be  resumed 
on  Thursday,  at  10.30. 

Hearing  adjourned,  to  be  resumed  at  10.30  a.m.,  on 
Thursday,  December  7,  1916. 


1917.] 


HOUSE  — No.  1875. 


241 


EIGHTH  DAY. 

Hearing  held  at  room  362,  State  House,  Boston,  Mass.,  at 
10.30  A.M.,  on  Dec.  7,  1916. 

Sitting.  — All  the  members  of  the  Commission,  viz.: 
The  Lieutenant-Governor,  President  Wells,  Speaker  Cox, 
Senators  Bates  and  Eldridge,  Representatives  Jewett  and 
Newhall,  Commissioners  Macleod,  Meaney,  Stone,  Eastman 
and  Russell  [of  the  Public  Service  Commission]  and  Com- 
missioners Swain,  Allen,  Ellis,  Quincy  and  Noyes  [of  the 
Boston  Transit  Commission]. 

Absent.  — Representative  Donovan. 

Appearances.  — For  the  Boston  Elevated  Railway  Com- 
pany: Matthew  C.  Brush,  Esq.,  President,  Frederic  E. 
Snow,  Esq.  [Gaston,  Snow  & Saltonstall],  Counsel.  For  the 
city  of  Boston:  George  A.  Flynn,  Esq.,  Assistant  Corporation 
Counsel. 

The  Lieutenant-Governor.  The  Commission  will  be  in 
or^ler.  We  will  hear  you  now,  Mr.  Snow. 

Argument  of  Frederic  E.  Snow,  Esq. 

Mr.  Chairman,  Air.  Alatthews  on  behalf  of  the  Boston 
Real  Plstate  Exchange  has  claimed  that  the  probable  increase 
in  the  company’s  business  during  the  next  three  years  will, 
on  the  company’s  own  showing,  take  care  of  the  increase  in 
operating  costs,  fixed  charges,  etc.,  and  that  therefore  this 
Commission  should  confine  itself  at  the  present  time  to  pro- 
viding means  for  the  Ck)mpany  to  obtain  the  necessary  addi- 
tional capital  and  to  postpone  for  further  consideration  the 
question  of  whether  additional  net  revenue  must  be  provided. 

I understood  Air.  Alatthews,  however,  to  state  verbally 
at  the  last  hearing  that  in  his  oi)inion  the  company’s  financial 
condition  is  very  much  worse  than  represented  in  the  com- 
pany’s statement,  and  that  the  directors  should  have  applied 
at  least  five  years  ago  for  additional  financial  relief. 


242 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


There  is  no  justification,  however,  for  IMr.  ]Matthews’ 
statement  that  the  probable  increase  in  the  company’s  busi- 
ness during  the  next  three  years  will  take  care  of  the  in- 
creased cost  of  operation  and  the  increased  charges.  It  is 
' based  upon  the  assumption  that  at  the  end  of  the  year  ending 
June  30,  1919,  the  company  will  need  only  $1,650,000  in- 
crease in  net  revenue.  As  a matter  of  fact,  the  company  in 
its  statement  made  no  estimate  of  the  anticipated  increases 
in . operating  costs  and  fixed  charges  for  the  year  ending 
June  30,  1919.  It  did  make  an  estimate  of  certain  known 
increases  for  the  year  ending  June  30,  1917,  and  June  30, 
1918,  which  amounted  to  $1,649,, 794.  It  was  expressly 

stated,  however  (see  company’s  statement,  p.  49),  that  these 
figures  did  not  include  any  additional  amounts  which  the 
company  might  be  required  to  charge  oft’  to  current  deprecia- 
tion, any  increase  in  taxes  or  increase  in  interest  due  to  the 
temporary  borrowing  of  money  pending  the  issue  of  further 
capital,  either  of  the  West  End  or  Elevated,  nor  did  it  in- 
clude interest,  dividends  and  taxes  which  might  be  required 
to  be  paid  on  additional  capital  issued  in  the  meantime. 

In  the  statement  made  before  the  Commission  the  com- 
pany has  intentionally  avoided  attempting  to  make  any  de- 
tailed estimate  of  earnings,  expenses  and  fixed  charges  for  the 
years  ending  June  30,  1918,  and  June  30,  1919,  because  the 
items  entering  into  any  such  computation  on  both  sides  are 
so  uncertain. 

By  an  examination  of  Exhibit  C it  will  be  seen  that  the 
increase  in  the  number  of  passengers  carried,  that  is,  in 
the  gross  income,  has  been  subject  to  very  great  variations, 
dei)ending  very  largely  U])on  business  and  other  conditions. 
In  the  light  of  that  statement  without  any  knowledge  as  to 
when  the  Euroj)ean  war  is  likely  to  end  and  what  the  effect 
will  be  on  this  country  at  the  end  of  the  war,  it  is  impossible 
to  make  any  estimate  of  any  value  as  to  whether  the  increase 
in  the  number  of  revenue  ])assengers  carried  is  likely  to 
continue  during  the  next  two  years  at  the  same  rate  as  in 
1916  or  not,  but  even  if  it  should,  or  even  if  it  should  be 
somewhat  larger,  it  is  still  evident  that  it  will  not  be  any- 
where near  sufficient  to  take  care  of  the  increase  in  operating 


1917.] 


HOUSE  — No.  1875. 


243 


expenses,  the  increase  in  fixed  charges  and  provide  for  a 
reasonable  dividend  of  6 per  cent  upon  the  capital  stock  of 
the  company. 

In  addition  to  the  various  items  of  increase  mentioned 
on  page  49,  the  federal  taxes  paid  by  the  company  will  be 
substantially  increased  because  of  the  change  in  the  law 
made  at  the  last  session  of  Congress.  The  federal  income 
tax  on  net  earnings  has  been  increased  from  1 per  cent 
to  2 per  cent.  Congress  has  also  imposed  a new  corporation 
tax  on  all  corporations,  which  after  July,  1917,  will  be  at 
the  rate  of  S50  or  $1,000  on  the  fair  value  of  the  capital 
stock. 

During  the  year  ending  June  30,  1919,  a still  further  in- 
crease in  the  rate  of  wages,  is  provided  for  by  the  Agreement 
with  the  Amalgamated  Association,  which  it  is  estimated 
will  cost  the  company  at  least  $200,000  more  for  the  year 
for  the  same  amount  of  service  rendered. 

The  company  will  also  have  additional  interest  charges  to 
pay  on  its  present  outstanding  indebtedness,  and  will  also 
have  a substantial  increase  in  charges  in  respect  of  additional 
capital  which  should  be  provided  in  the  near  future. 

The  company  now  has  pending  before  the  Public  Service 
Commission  the  petition  of  the  West  End  Street  Railway 
Company  to  issue  $2,700,000  of  West  End  bonds  to  pay  off 
the  $2,700,000  of  West  End  bonds  which  mature  on  iMarch 
1,  1917.  The  outstanding  bonds  carry  interest  at  4 per  cent. 
The  new  bonds,  in  order  to  be  sold  at  par,  as  required  by  the 
West  Phid  lease,  will  have  to  carry  at  least  5 per  cent,  which 
means  a sub.stantial  increase  in  the  interest  charge  on  this 
particular  lot  of  bonds. 

As  stated  on  page  49  of  the  company’s  statement,  the 
Elevated  requires  from  $5,000,000  to  $7,000,000  of  additional 
capital  within  the  next  three  years.  If  this  should  be  pro- 
vided from  the  proceeds  of  the  sale  of  the  Cambridge  sub- 
way, the  new  ca])ital  would  increase  the  company’s  charges  by 
4|  per  cent  upon  the  amount  expended,  if  that  is  the  rate  of 
rental  fixed  for  the  Cambridge  subway.  If  this  new  capital 
is  sui)plied  by  the  issue  of  the  company’s  stock  and  bonds, 
the  annual  cost  will  be  substantially  more  than  4j  per  cent. 


244 


BOSTON  ELEVATED  RAILWAY. 


[War. 


This  estimated  increase  in  capital  does  not  include  addi- 
tional capital  which  would  have  to  be  issued  to  take  care 
of  the  necessary  additions  and  improvements  of  the  property 
of  the  West  End  Street  Railway  Company.  The  annual  cost 
of  this  new  capital  depends  upon  the  price  at  which  the  West 
End  securities  can  be  sold.  In  any  event,  the  cost  of  this 
new  capital  which  must  be  provided  prior  to  June  30,  1^19, 
will  result  in  a substantial  annual  increase  in  the  charges  to 
be  taken  care  of. 

In  addition  to  the  foregoing  there  is  the  possibility  of  it 
being  necessary  to  make  additional  provision  for  deprecia- 
tion and  for  taking  care  of  the  future  losses  in  value  incident 
to  the  abandonment  of  property  which  has  become  unde- 
sirable for  railway  purposes  and  the  reconstruction  and  pos- 
sible consolidation  of  portions  of  the  company’s  property 
and  equipment  to  bring  about  more  economical  operation. 

Beyond  the  mere  keeping  of  the  company’s  property  in 
first  class  operating  condition,  it  should  have  an  income 
sufficient  to  enable  it  to  substitute  neAv  and  improved  equip- 
ment for  existing  equipment,  even  if  the  latter  is  in  good 
operating  condition,  providing  the  change  results  in  a de- 
crease in  operating  expenses  and  better  public  accommoda- 
tion. If  in  order  to  secure  more  economical  operation  it  is 
desirable  to  consolidate  its  shops,  consolidate  its  car  barns, 
or  re-arrange  or  reconstruct  its  power  stations,  it  should 
have  sufficient  income  to  enable  it  to  absorb  in  time  the 
loss  which  necessarily  follows  from  discontinuing  the  use  of 
property  for  railway  purposes.  If  the  company  is  in  a posi- 
tion to  do  these  things,  it  will  not  only  result  in  lower 
operating  costs,  but  will  also  result  in  better  and  more  satis- 
factory service. 

The  probable  increase  in  business  will  not  take  care  of 
the  practically  known  increase  in  operating  exi)enses  and 
increase  in  subway  rentals  even  if  no  additional  capital 
either  of  the  West  End  or  Elevated  should  l)e  issued  in  the 
next  three  years  and  even  if  no  additional  provision  should 
be  made  for  depreciation,  reconstruction  or  rehabilitation. 

I do  not  know  that  the  ElcvattMl,  as  such,  is  directly  in- 
volved in  the  (juestion  of  whether  the  taxj)ayers  of  Boston 


1917.] 


HOUSE  — No.  1875. 


245 


are  at  present  carrying  any  of  the  burdens  of  subways. 
Whatever  ingenious  computations  may  be  made,  however,  it 
is  clear  that  up  to  the  present  time  neither  the  city  of 
Boston  nor  the  taxpayers  have  contributed  one  dollar  toward 
the  interest  or  sinking  fund  requirements  for  the  subway 
bonds  issued  by  the  city  of  Boston  with  the  exception  of  the 
amount  contributed  for  the  abolition  of  the  one  cent  toll  in 
connection  with  the  East  Boston  tunnel. 

As  to  whether  or  not  there  was  any  general  understanding 
that  the  rentals  of  the  Tremont  Street  subway,  the  East 
Boston  tunnel  and  the  Washington  Street  tunnel  should  be 
sufficient  to  pay  the  interest  and  provide  sinking  funds  which 
would  pay  off  the  bonds  issued  by  the  city  at  maturity,  I do 
not  know,  but  I do  know  that  there  was  no  such  under- 
standing at  the  time  the  construction  of  the  Dorchester 
tunnel,  the  Boyiston  Street  subway  and  the  East  Boston 
tunnel  extension  were  authorized.  In  1911,  when  the  ques- 
tion of  authorizing  the  construction  of  the  Dorchester  tunnel, 
the  Boyiston  Street  subway  and  the  East  Boston  tunnel 
extension  and  the  extension  of  the  present  subway  leases 
were  under  consideration,  I wrote  to  the  Committee  on  Street 
Railways,  which  had  the  matter  under  consideration,  as  fol- 
lows ; — 

According  to  the  figures  which  have  been  made  by  the  Actuary  of 
the  New  England  Life  Insurance  Company  and  which  were  submitted 
to  the  joint  boards  if  the  bill  in  question  should  be  adopted  and  the 
East  Boston  tunnel  tolls  substantially  reduced  after  1911  and  entirely 
abolished  after  1917,  the  Tremont  Street  subway  bonds,  the  East  Bos- 
ton tunnel  bonds,  the  Washington  Street  tunnel  bonds  and  the  Beacon 
Hill  tunnel  bonds  will  all  be  paid  at  their  maturity,  without  any  expense 
to  the  city  for  interest  or  sinking  funds  and  the  new  tunnel  and  subway 
bonds  which  may  be  issued  for  the  Kiverbank  subway  or  any  subway 
substituted  therefor  and  for  a new  subway  to  the  South  Station  and  to 
Dorchester  will  be  paid,  principal  and  interest,  without  expense  to  the 
city  in  1952  or  195.3.  The  entire  system  of  subways  and  tunnels  will 
then  be  the  property  of  the  city  witliout  having  cost  the  city  a cent. 


I do  not  know  whether  the  estimate  then  made  by  tlie 
Actuary  of  the  New  England  Life  Insurance  Company  con- 
templated that  the  city  might  have  to  i)ay  as  high  as 


246 


BOSTON  ELEVATED  RAILWAY. 


[]\Iar. 


per  cent  for  some  of  the  money  which  it  raised,  and  it  is 
possible  that  some  modification  in  that  estimate  might  now 
be  required  because  of  that  fact.  In  any  event,  the  acts 
authorizing  the  construction  of  any  of  these  new  tunnels  did 
not  provide  for  the  establishment  of  any  immediate  sinking 
fund  to  retire  the  bonds  issued  to  pay  for  them,  and  any 
estimate  of  loss  to  the  taxpayer  based  upon  the  assumption 
that  such  a sinking  fund  either  was  required  or  should  have 
been  established  is  erroneous  and  misleading.  Sections  36 
and  37  of  chapter  741  of  the  Acts  of  1911  are  as  follows:  — 

Section  36.  In  order- to  provide  for  the  abolition  at  the  earliest 
possible  date  of  the  toll  required  of  passengers  using  the  East  Boston 
tunnel,  and  in  order  to  provide  for  the  payment  of  the  bonds  issued  for 
the  Washington  Street  tunnel,  the  rental  received  from  the  proposed 
Dorchester  tunnel,  from  the  proposed  Boylston  Street  subway  and 
from  the  proposed  East  Boston  tunnel  extension,  if  the  same  shall  be 
constructed,  over  and  above  the  amount  required  to  pay  the  interest 
on  the  bonds  issued  therefor,  and  the  rental  received  from  the  Tremont 
Street  subway,  over  and  above  the  amount  required  to  meet  the  interest 
and  sinking  fund  requirements  of  the  bonds  issued  therefor,  shall,  in 
addition  to  the  rental  payable  by  the  Boston  Elevated  Railwa}’’  Com- 
panj’’  under  the  lease  of  the  East  Boston  tunnel,  be  applied  to  meet  the 
interest  and  sinking  fund  requirements  of  the  bonds  issued  for  the  con- 
struction of  the  East  Boston  tunnel;  and  in  so  far  as  such  rentals  may 
not  be  required  for  that  purpose  they  shall  be  applied,  in  addition  to  the 
rental  pa5’^able  for  the  Washington  Street  tunnel,  to  meet  the  interest 
and  sinking  fund  requirements  of  the  bonds  issued  for  the  construction 
of  said  Washington  Street  tunnel. 

Section  37.  The  excess  rentals  of  the  East  Boston  tunnel,  the 
Tremont  Street  subw'aj’’,  the  Washington  Street  tunnel,  the  proposed 
Dorchester  tunnel,  the  proposed  Boylston  Street  subway  and  the  pro- 
posed East  Boston  tunnel  extension,  if  the  same  shall  be  built,  not 
needed  to  provide  for  the  interest  and  sinking  fund  requirements  speci- 
fied in  the  preceding  section,  and  any  rental  of  the  tunnel  of  the  Cam- 
bridge connection,  so-called,  not  needed  to  provide  for  the  interest  and 
sinking  fund  requirements  of  the  bonds  issued  therefor,  shall  be  apjilied, 
so  far  as  may  be  necessary  to  meet  the  interest,  sinking  fund  and  install- 
ment re(}uiremeiits  of  the  yther  bonds  constituting  tlie  consolidated 
transit  loan. 

In  other  words,  tlie  efi’ect  of  the.se  provisions  is  tliat  all 
rentals  of  tlie  Dorcliester  tunnel,  Boylston  Street  subway 
and  East  Boston  tunnel  extension  in  excess  of  tlie  amount 


•1917.] 


HOUSE  — Xo.  1875. 


247 


required  to  pay  interest  on  the  bonds  issued  are  to  be  applied 
toward  the  payment  at  maturity  of  the  bonds  issued  to  pay 
for  the  Tremont  Street  subway,  East  Boston  tunnel  and 
Washington  Street  tunnel.  As  soon  as  those  bonds  have 
been  paid  the  entire  rentals  of  the  Washington  Street  tunnel, 
the  Tremont  Street  subway  and  East  Boston  tunnel,  together 
with  the  rentals  of  the  other  subways,  will  become  available 
for  the  payment  of  the  principal  and  interest  of  the  bonds 
issued  for  the  Dorchester  tunnel.  Boy  1st  on  Street  subway 
and  East  Boston  tunnel  extension. 

The  salary  list  and  management  expenses  of  the  company 
have  been  criticized  by  certain  speakers  at  these  hearings  as 
being  excessive. 

Because  of  the  magnitude  of  the  enterprise  these  expenses 
are  necessarily  large,  and  because  they  are  large  they  are 
criticized  without,  at  least  in  some  instances,  any  adequate 
knowledge  as  to  whether  they  are  proportional  to  the  services 
rendered  and  the  responsibility  involved.  ^ 

The  salaries  of  the  general  officers  are  fixed  by  the  Board 
of  Directors,  whose  sole  interest  is  to  secure  the  best  services 
and  advice  for  as  reasonable  compensation  as  possible.  They 
have  no  conceivable  reason  either  because  of  friendship  or 
other  relations  to  pay  any  officer  any  more  than  what  they 
believe  his  services  are  reasonably  worth.  I know  of  no 
standard  for  determining  the  proper  compensation  for  officers 
engaged  in  managing  property  of  this  character.  The  serv- 
ices of  one  man  may  be  almost  invaluable,  while  the  services 
of  another  man  in  the  same  capacity  may  be  worth  less  than 
nothing. 

Tested  by  the  results  obtained  and  by  the  compensation 
paid  by  other  similar  public  service  corporations,  the  manage- 
ment expenses  of  the  P^levated  are  reasonable.  While  due- 
credit  should  always  be  given  to  the  co-operation  of  all  who 
are  engaged  in  the  service  of  the  company,  the  final  responsi- 
bility for  the  success  or  failure  of  the  enterprise  rests  iipon 
the  management. 

The  management  of  the  Pdevated  is  entitled  to  the  credit 
of  having  conceived  and  provided  for  the  public  as  good,  if 


248 


BOSTON  ELEVATED  RAILWAY'. 


[]\Iar. 


not  the  best,  transportation  service  of  any  first  class  city  in 
the  country.  It  provides  surface,  underground  and  overhead 
transportation  for  a single  5-cent  fare  with  practically 
universal  free  transfers,  which  no  other  city  in  the  country 
does. 

In  view  of  the  enormous  increase  in  the  investment  as 
compared  with  the  increase  in  business,  and  in  view  of  the 
great  increase  in  wages,  I believe  that  the  Elevated  manage- 
ment is  entitled  to  credit  for  the  results  accomplished. 
Whether  these  results  could  have  been  accomplished  if  the 
number  of  salaried  officers  of  the  Elevated  had  been  less,  or 
whether  equally  competent  officials  could  have  been  obtained 
for  less  compensation  are  matters  of  conjecture. 

Specific  reference  has  been  made  to  the  salaries  of  the 
president  and  chairman  of  the  Board  of  Directors.  Prior  to 
the  election  of  ]\Ir.  Brush  as  president,  the  salary  of  General 
Bancroft  as  president  was  $36,000  and  of  Mr.  Brush  as  vice- 
president  was  $15,000,  or  an  aggregate  of  $51,000.  Since  the 
election  of  Mr.  Brush  as  president  the  salary  of  the  chair- 
man of  the  Board  has  been  fixed  at  $25,000  and  of  Mr.  Brush 
at  $25,000,  or  an  aggregate  of  $50,000,  which  is  $1,000  less 
than  the  aggregate  of  the  former  salaries  of  the  two  men. 

So  far  as  General  Bancroft  is  concerned,  he  has  been  prac- 
tically the  chief  executive  of  the  company  since  its  organiza- 
tion in  1897.  It  was  under  his  supervision  that  the  present 
property  was  created,  and  there  is  no  man  who  is  as  familiar 
with  the  property  and  the  details  of  its  operation  as  he  is. 
When  Mr.  Brush  was  elected  president,  the  directors  believed 
that  ordinary  prudence  required  the  retention  of  General 
Bancroft’s  services  for  the  present.  Ilis  salary  was  fixed  at 
$25,000  for  one  year,  for  which  he  continues  to  devote  his 
entire  time  to  tlie  afiairs  of  the  company.  If  his  services 
are  retained  thereafter,  it  is  not  anticipated  that  his  entire 
time  will  be  required  and  his  compensation  will  be  fixed 
accordingly. 

In  the  case  of  Mr.  Brush,  I ha])])en  to  know  tliat  within  a 
few  mojiths  he. was  offered  an  oi)portunity  to  go  with  another 
cori)oration  at  an  immediate  salary  much  larger  than  he  is 
now  getting  as  ])resident  of  the  Boston  Elevated  Railway 


1917.] 


HOUSE  — No.  1875. 


249 


Company,  with  a prospect  of  a still  further  increase  in  the 
near  future.  It  is  only  because  of  his  sense  of  obligation  to 
the  Elevated  that  he  has  remained  with  the  company. 

I understand  that  the  president  of  the  Philadelphia  Rapid 
Transit  Company  alone  is  paid  $100,000  a year;  that  the 
president  of  the  Interborough  Rapid  Transit  Company  of 
New  York  is  paid  a salary  of  $100,000  a year  and  the  chair- 
man of  the  Board  is  paid  a salary  of  $50,000  a year.  In  view 
of  the  responsibility  involved  and  the  services  rendered  I do 
not  believe  that  the  sum  of  $50,000  a year  as  compensation 
for  the  combined  services  of  the  president  and  chairman  of 
the  Board  can  be  fairly  criticized  as  being  too  high. 

Specific  reference  has  also  been  made  to  the  expenses  of 
the  legal  department. 

One  speaker  m.entioned  the  payment  of  $25,000  for  alleged 
absent  treatment  in  the  Legislature.  This  must  be  a pay- 
ment to  Mr.  Wardwell  of  $25,000  which  appeared  in  the  labor 
arbitration  hearings.  The  company,  discontinued  its  employ- 
ment of  Mr.  Wardwell  in  1913,  and  since  that  time  he  has 
not  been  employed  in  any  capacity  by  the  company. 

So  far  as  the  expenses  of  the  legal  department  are  con- 
cerned, there  can  be  no  fair  or  just  criticism  of  the  compensa- 
tion paid  without  knowledge  of  the  amount,  character  and 
value  of  the  work  done.  Outside  of  the  accident  department, 
the  principal  amount  paid  for  legal  services  was  paid  to 
Gaston,  Snow  & Saltonstall.  The  amount  for  the  year  end- 
ing June  30,  1916,  was  $64,724.24.  The  itemized  bills  are  on 
file  with  the  company  and  are  open  to  the  inspection  of  this 
Commission.  The  amounts  charged  for  the  services  rendered 
were  reasonable,  and  I believe  that  the  Elevated  manage- 
ment is  of  the  same  opinion. 

The  accident  department  of  the  company  is  in  immediate 
charge  of  the  general  attorney,  Mr.  Sears.  Eew  people  have 
any  conception  of  tlie  amount  of  work  involved  each  year 
which  is  done  by  this  department.  During  the  year  ending 
June  30,  1916,  there  were  26,806  reports  of  accidents.  Dur- 
ing the  same  year  10,385  claims  were  made  against  the  com- 
pany for  personal  injury;  1,290  suits  were  brought  in  the 
superior  court  and  163  in  the  municipal  courts  during  the 


250 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


year  to  recover  damages  for  personal  injuries.  Whenever  a 
claim  is  made  upon  the  company  it  becomes  necessary  for  it 
to  investigate  it  with  reference  not  only  to  the  liability  of 
the  company,  but  alsb  with  reference  to  the  extent  of  the 
injuries  suffered.  Where  suits  are  actually  brought,  attorneys 
must  be  retained  to  defend  them.  The  plaintiffs’  attorneys 
as  a rule  are  eminent  at  the  bar  and  have  had  great  experi- 
ence in  the  trial  of  cases  of  this  character.  The  cases  are 
extremely  difficult  to  defend  and  it  is  necessary  for  the  com- 
pany to  employ  attorneys  as  experienced  as  those  employed 
by  the  plaintiffs.  This  department  in  my  judgment  is  con- 
ducted in  a most  efficient  and  economical  manner,  and  I 
believe  that  anyone  who  would  take  the  trouble  to  famil- 
iarize himself  with  the  amount  and  character  of  the  work 
done  would  be  of  the  same  opinion. 

The  problem  before  the  Special  Commission  may  be  con- 
sidered to  consist  of  two  parts. 

1.  Is  the  financial  condition  of  the  Elevated  such  that  it 
needs  financial  relief;  and 

2.  If  it  does  need  financial  relief,  in  what  form,  if  any, 
shall  such  relief  be  granted. 

Several  speakers  before  the  Commission  have  very  properly 
suggested  that  the  Commission  should  in  the  first  instance 
satisfy  itself  that  the  statements  of  the  Elevated  in  regard  to 
its  financial  condition  are  correct.  The  facts  in  regard  to 
this  are  in  the  possession  of  the  Public  Service  Commission, 
and,  in  my  judgment,  they  are  in  a position  without  outside 
investigation  to  advise  the  Special  Commission  regarding  the 
financial  statements  of  the  company. 

In  order  to  show  the  extent  of  the  supervision  exercised  by 
the  public  authorities  over  the  affairs  of  the  company,  I 
proi)ose  to  quote  some  of  the  stiitutory  powers  of  the  Com- 
mission and  then  to  show  to  what  extent  they  have  been 
exercised.  While  I shall  refer  solely  to  the  Public  Service 
Commission  as  such,  the  S])ecial  Commission  is  aware  of  the 
fact  that  these  ])owers  are  to  a considerable  extent  merely  a 
continuation  of  the  ])owers  ])reviously  exercised  by  the  Rail- 
road ('ommission. 

d’he  Public  Service  ('ommission  law,  cha])ter  784  of  the 
.Vets  of  1918,  ])rovides  as  follows: 


1917.] 


HOUSE  — No.  1875. 


251 


Section  2.  The  commission  shall,  so  far  as  may  be  necessary  for 
the  purpose  of  carrying  out  the  provisions  of  this  or  any  other  act,  have 
general  supervision  and  regulation  of,  and  jurisdiction  and  control  over, 
the  following  services.  [In  which  is  included  street  railway  transporta- 
tion.] 

Section  9.  The  commission  may  appoint  or  employ  such  engineers, 
accountants,  statisticians,  bureau  chiefs  and  division  heads,  assistants, 
inspectors,  clerks  and  other  subordinates  as  it  may  deem  advisable. 
The  commission  may  expend  such  sums  to  procure  opinions,  advice, 
plans,  surveys,  appraisals,  audits,  examinations,  statistics,  information, 
apparatus,  instruments,  books,  tables,  maps,  drawings,  supplies  and 
sundries  as  it  ma}"  from  time  to  time  deem  requisite  in  the  performance 
of  its  duties. 

Section  10.  The  commission  may  inquire  into  the  rates,  charges, 
regulations,  practices,  equipment  and  service  of  common  carriers  in  this 
Commonwealth,  and  elsewhere,  rendering  any  service  of  a kind  subject 
to  its  jurisdiction. 

Section  11.  The  commission  may,  either  through  its  members  or 
by  employees  duly  authorized  by  it,  examine  all  books,  contracts,  rec- 
ords, documents,  papers,  and  memoranda  of  any  common  carrier.  The 
commission  may  provide  for  an  annual  audit  by  employees  duly  author- 
ized by  it  of  all  the  accounts  of  any  common  carrier  or  class  of  common 
carriers  whenever  it  deems  such  action  advisable. 

Section  12.  The  commission  may  from  time  to  time  establish  and 
prescribe  a system  of  forms  of  accounts  to  be  used  by  the  common  car- 
riers subject  to  its  supervision.  The  commission  may  also  in  its  discre- 
tion prescribe  the  forms  of  records  and  memoranda  to  be  kept  by  such 
common  carriers. 

Section  1.3.  The  commission  majq  either  through  its  members  or 
responsible  agents,  engineers,  inspectors  or  examiners  duly  authorized 
by  it,  enter  upon  any  premises  occupied  by  any  common  carrier  for  any 
purpose  consistent  with  the  provisions  of  this  act.  It  may  inspect  the 
property,  equipment,  buildings,  plants,  factories’,  power  houses,  ducts, 
conduits  and  offices  of  any  common  carrier. 

Section  14.  The  commission  may  investigate  and  determine  the 
fair  value  for  any  purpose  of  all  the  property  of  any  common  carrier 
rendering  a public  service  subject  to  the  supervision  of  the  commission. 

Section  16.  llefore  any  railroad  corporation  shall  issue  any  shares 
of  capital  stock  or  any  bonds,  notes  or  other  evidences  of  indebtedness 
payable  in  periods  of  more  than  twelve  months  after  the  date  thereof, 
it  shall  apply  to  the  commission  for  its  approval  of  the  proposed  issue 
to  such  an  amount  as  the  commission  shall  determine  to  be  reasonable 
and  proper  for  the  purpose  of  funding  its  floating  debt  properly  incurred 
for  lawful  purposes,  or  reasonable  and  proper  for  any  other  lawful  pur- 
pose set  forth  in  the  application  for  such  approval.  Any  order  of  the 
commission  approving  any  such  issue  may  provide  for  the  application 


252 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


of  the  proceeds  thereof  to  such  particular  uses  as  the  commission  shall 
by  that  order  or  by  some  subsequent  order  specify,  and  the  corporation 
shall  not  apply  such  proceeds  otherwise  than  as  thus  specified  in  such 
order  or  orders. 

Section  23.  Whenever  the  commission  shall  be  of  opinion,  after  a 
hearing  had  upon  its  own  motion  or  upon  complaint,  that  the  regula- 
tions, practices,  equipment,  appliances  or  service  of  any  common  car- 
rier, are  unjust,  unreasonable,  unsafe,  improper  or  inadequate,  the 
commission  shall  determine  the  just,  reasonable,  safe,  adequate  and 
proper  regulations  and  practices  thereafter  to  be  in  force  and  to  be 
observed  and  the  equipment,  appliances  and  ser\dce  thereafter  to  be 
used. 

In  general,  the  Public  Service  Commission  has  complete 
control  over  the  issues  of  capital  stock  and  bonds,  including 
the  right  to  determine  whether  particular  expenditures  are 
properly  charged  to  capital  account  and  as  to  whether  or  not 
the  expenditures  made  for  such  purposes  are  reasonable  and 
economical.  They  have  complete  control  over  the  accounting 
of  the  company  and  the  right  to  require  the  most  detailed 
reports  as  to  all  expenditures,  whether  for  capital  purposes  or 
for  ordinary  operating  expenses  of  the  company,  and  they 
likewise  have  practically  complete  control  over  the  extent, 
quality  and  character  of  the  service  rendered. 

The  Public  Service  Commission  have  not  treated  these 
powers  as  a dead  letter,  and  have  not  waited  for  complaints 
to  be  made  before  'they  have  exercised  them.  On  the  con- 
trary, having  in  mind  the  presumed  intention  of  the  Legisla- 
ture, they  have  diligently  and  thoroughly  done  the  things 
which  the  Legislature  authorized  them  to  do. 

Before  approving  any  issue  of  stock  or  bonds,  if  the  work 
has  not  been  done  or  the  expenditure  made,  the  Public 
Service  Commission  insists  upon  a detailed  estimate  of  the 
probable  cost  of  the  work,  which  is  checked  up  by  their  own 
experts.  If  the  expenditure  has  been  made,  then  the  com- 
pany is  required  to  submit  statements  in  the  utmost  detail 
of  the  expenditures  and  these  are  verified  by  the  experts  of 
the  Public  Service  Commission,  not  only  as  having  been 
actually  made,  but  as  having  been  reasonable  in  price  and 
amount.  I show  you  herewith  copies  of  the  statements  filed 
with  the  Public  Service  (\)mmis.sion  in  connection  with  the 


1917.] 


HOUSE  — Xo.  1875. 


253 


issues  of  capital  of  the  West  End  Street  Railway  Company, 
showing  the  detail  in  which  this  information  is  furnished  to 
the  Commission. 

This  contains  photographic  copies  of  all  the  bills  which 
have  been  filed  with  the  Public  Service  Commission  in  con- 
nection with  the  authorization  of  capital  stock  and  bonds  of 
the  West  End  Street  Railway  Company,  and  an  examination 
will  show  the  detail  in  which  this  information  is  required  by 
the  Public  Service  Commission.  [Hands  to  Commission  two 
volumes  of  print.] 

In  connection  with  the  last  issue  of  bonds  of  the  Elevated 
road,  by  an  order  dated  November  9,  1915,  the  particular 
purposes  to  which  the  proceeds  of  these  bonds  should  be  used 
were  specified  in  the  order,  even  to  the  extent  of  saying  that 
bonds  to  the  amount  of  $15,000  should  be  used  for  certain 
purposes,  and  bonds  to  the  amount  of  $18,000  for  certain 
other  purposes.  The  order  further  read: 

It  is  further  ordered,  That  all  contracts  covering  the  purchase  of 
material  or  machinery  to  be  used  in  connection  with  any  of  the  construc- 
tion items  heretofore  mentioned,  or  the  installation  thereof,  shall  be 
filed  with  the  accountant  of  the  Commission  as  soon  as  executed ; also 
that  the  company  shall  keep  true  and  accurate  accounts  showing  the 
receipt  and  application  by  it  of  the  proceeds  of  the  sale  or  disposition 
of  all  bonds  authorized  to  be  issued  hereby,  and  report  in  writing  to 
the  Commission  on  or  before  the  twentieth  day  of  each  month  its 
receipts  and  disbursements  during  the  previous  month  of  the  proceeds 
of  said  bonds,  said  report  to  be  made  as  directed  by  the  accountant  of 
the  Commission. 

In  accordance  with  that  order,  here  Is  a statement  which 
has  already  been  filed,  a copy  of  what  has  already  been  filed 
up  to  date,  containing  items  down  to  six  machine  bolts  for 
six  cents,  six  pairs  of  hinges,  nine  cents,  showing  the  detail 
in  which  this  information  is  furnishecl  and  is  on  file  in  the 
Public  Service  Commission. 

Each  year  the  company  makes  a returji  under  oath  to  the 
Public  Service  (’ommission  giving  the  details  of  its  annual  in- 
come and  expenditures.  1 have  submitted  to  the  Commis- 
sion a copy  of  this  statement  for  the  year  ending  June  30, 
1910,  from  which  you  can  .see  in  what  detail  it  is  required  to 


254 


BOSTON  ELEVATED  BAILWAY. 


[Mar. 


be  made.  This  is  the  statement  which  has  already  been 
handed  to  the  Board. 

The  Commission,  however,  is  not  satisfied  to  accept  this 
return  as  correct  without  further  examination,  and  for  a 
number  of  years,  through  its  auditing  department,  has 
checked  up  every  item  of  income  and  expenditure  by  per- 
sonal examination  of  every  voucher. 

In  addition  to  the  annual  returns,  the  company  is  required 
to  file  with  the  Commission  copies  of  all  written  contracts 
and  agreements,  whatever  their  nature  may  be,  which  are 
made  with  other  companies  or  individuals  with  the  exception 
of  informal  contracts  relative  to  the  purchase  of  materials  or 
supplies  involving  an  expenditure  of  less  than  five  thousand 
dollars. 

‘ I have  here  a copy  of  the  letters  transmitting  to  the  Public 
Service  Commission  during  the  last  six  months  of  the  year 
copies  of  orders  and  letters.  Each  letter  contains  a large 
number  of  orders  and  contracts  so  that  you  can  see  the 
number  of  letters  and  numbers  of  orders  and  contracts  are 
many  times  the  number  of  letters  transmitted.  [Displays  file 
of  papers.] 

By  an  order  dated  November  24,  1913,  the  company  is  re- 
quired to  file  with  the  Commission  a statement  of  all  pay- 
ments of  the  following  character: 


Commonwealth  of  Massachusetts, 

PuBiic  Service  Commission,  November  24,  1913. 

(P.  S.  C.  173.) 

In  executive  meeting  of  the  Commission  held  this  day  the  following 
action  was  taken: 

Ordered,  That  each  railroad,  street  railway  and  other  corporation  and 
association  subject  to  the  supervision  of  this  Commission,  shall  from  and 
after  October  1,  1913,  submit  to  the  Commission  in  such  form  as  the 
Commission  shall  jwescribe,  a sworn  ciuarterly  statement  showing  in 
detail: 

{a)  All  payments  made  by  it,  directly  or  indirectly,  to  any  news- 
paper, jieriodical  or  advertising  agency,  or  to  any  emiiloyee  thereof  or 
vTiter  therefor,  together  with  all  other  iiayments  of  every  kind  for  ad- 
vertising or  other  publicity,  excluding,  however,  expenses  incurred  for 
the  printing  and  distribution  of  time-tables,  telephone  directories,  cir- 
culars and  pamphlets  of  information,  issued  directly  by  such  company 


1917.] 


HOUSE  — Xo.  1875. 


255 


to  its  patrons  and  to  the  general  public  in  the  name  of  the  company  or 
of  one  of  its  officers. 

(6)  All  salaries  and  expenses  paid  to  and  through  its  regular  legal 
department  to  attorneys  resident  in  ^Massachusetts  or  doing  business 
for  the  company  in  Massachusetts,  not,  however,  including  actual  pay- 
ments for  damages  to  person  or  propert}^ 

(c)  All  payments  for  legal  services  to  any  person  resident  or  doing 
business  for  the  company  in  ^lassachusetts,  although  not  regularly 
connected  with  its  legal  department,  and  aii}^  expenses  made  and  paid 
through  such  person,  excluding,  as  in  (h),  damages  paid, 

(d)  All  payments  for  services  of  any  character  rendered  to  such  cor- 
poration in  connection  with  legislation  in  Massachusetts,  or  the  action 
of  the  Legislature  of  Massachusetts,  or  of  any  committee  or  member 
thereof,  or  of  any  Massachusetts  public  officer  or  board,  whether  State, 
county  or  municipal. 

ie)  All  sums  paid  directly  or  indirectly  for  the  purpose  of  assisting 
or  influencing  in  any  way  the  nomination  or  election  of  any  person  to 
any  public  office  in  Massachusetts,  or  for  the  purpose  of  assisting  or 
defeating  anj'  political  party,  political  faction  or  political  or  govern- 
mental policy  in  Massachusetts. 

(/)  A sworn  statement  of  all  contracts  or  agreements  made  with 
reference  to  advertising,  publicity,  legal  work  or  work  in  any  way  con- 
nected with  legislation  or  contemplated  legislation  in  Massachusetts, 
or  with  influencing  or  attempting  to  influence  or  inform  public  or  legis- 
lative opinion  in  Massachusetts,  together  with  copies  of  all  such  con- 
tracts or  agreements  as  may  be  in  writing  and  copies  of  all  votes  of 
directors,  committees  or  officers  of  any  company  or  association  in  respect 
to  the  same. 

ig)  All  payments  not  specifically  covered  by  the  above,  charged  in 
the  case  of  steam  railroads  to  “Other  Expenses”  under  the  heading  of 
“General  Expenses”,  and  in  the  case  of  street  railways  to  “General 
Expenses”  under  the  heading  of  “General  and  Miscellaneous  Ex- 
penses ”.  In  the  case  of  other  corporations  expenses  of  the  same  general 
nature,  — to  be  hereafter  more  specifically  designated  by  the  chief 
accountant  of  this  Commission. 

8uch  statement  shall  show  in  detail  the  name  and  address  of  the 
person.  Arm  or  corporation  to  whom  the  payments  shall  have  been 
made,  the  amounts  and  dates  of  i)ayment  and  the  nature  and  character 
of  the  services  rendered. 

Provided  that: 

( 1 ) Any  company  or  association  having  an  annual  gross  income  of 
less  than  $50,000  may,  on  api)lication,  in  the  discretion  of  the  Commis- 
sion be  excused  from  the  operation  of  this  order  on  such  substitute  terms 
as  the  Commission  may  designate. 

(2)  Any  corporation  or  association  having  an  annual  gross  income 
greater  than  .$.50,000  may,  for  goocl  cause  shomi,  on  application  to  the 


256 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commission,  be  excused  from  the  operation  of  the  whole  or  any  part  of 
the  foregoing  order,  the  Commission  reserving  the  right  to  make  for 
such  corporation  any  such  substitute  order  as  the  special  conditions  and 
circumstances  may  require. 

By  order  of  the  Commission, 

(Signed)  Andrew  A.  Highlands, 

Secretary. 

Mr.  William  A.  Bancroft, 

President,  Boston  Elevated  Railway  Company, 

101  Milk  Street,  Boston,  Mass.  ^ 

In  accordance  with  that  requirement,  the  return  filed  by 
the  Boston  Elevated  Company  for  the  quarter  ending  June 
30,  1916,  I have  here,  ancl  you  can  see  the  immense  amount 
of  detail  information  which  was  furnished  by  the  company 
to  the  Public  Service  Commission  for  the  quarter.  [Exhibits 
file  of  returns.] 

The  Public  Service  Commission  further  not  only  super- 
vises, but  exercises  control  over  the  extent,  character  and 
quality  of  the  service  which  the  company  is  rendering.  Two 
of  their  inspectors,  Mr.  McLain  and  'Sir.  Scott,  have  been 
assigned  exclusively  to  the  Boston  Elevated,  the  Middlesex 
& Boston  and  the  Boston  & Worcester  roads.  This  means 
that  the  greater  portion  of  their  time  is  devoted  exclusively 
to  the  Boston  Elevated.  These  officials  examine  and  inspect 
the  equipment,  rolling  stock,  tracks  and  other  property  of  the 
company  and  thoroughly  familiarize  themselves  with  the 
details  of  its  operation.  For  these  purposes  they  are  in 
almost  daily  consultation  with  the  officials  of  the  company. 
The  supervision  and  control  of  the  Commission  over  the 
extent,  character  and  quality  of  the  service  includes  their 
ajiproval  of  the  type  of  equipment  used,  the  number  of  cars 
to  be  run  upon  particular  routes,  the  number  of  stopping 
])laces,  and,  in  fact,  almost  every  detail  connected  with  the 
o])eration  of  the  road  is  subject  to  the  control  of  the  Com- 
mission, in  so  far  as  they  may  determine  that  changes  or 
modifi(*ations  are  recjuired. 

In  addition  to  that  the  Public  Service  ( Commission  were 
requested  by  the  Legislature  of  1914  to  investigate  and  report 
to  the  Legislature  — to  make  a comjilett*  investigation  and 


1917.] 


HOUSE  — Xo.  1875. 


257 


study  of  the  transportation  needs,  present  and  future,  of 
Boston  and  other  cities  and  towns  served  in  the  metropolitan 
district,  wuth  particular  reference  to  all  problems  regarding 
the  capitalization,  revenues,  revision  of  fares  and  deprecia- 
tion of  properties. 

In  connection  with  this  investigation,  the  Public  Service 
Commission  employed  outside  its  own  staff  Mr.  Bennett, 
who  is  an  officer  of  the  Wisconsin  Railroad  Commission, 
and  who  devoted  his  time,  with  assistants,  from  October  until 
nearly  March,  in  investigating  these  properties.  And  he 
made  a very  elaborate  report  which  was  submitted  in  con- 
nection with  the  report  made  by  the  Public  Service  Com- 
mission. 

I do  not  mean  to  suggest  for  a minute  that  the  Public 
Service  Commission  have  power  to  fix  the  salaries  of  any 
officials  or  to  determine  the  compensation  or  wages  that  shall 
be  paid  to  the  employees  of  the  road,  but  I do  mean  to  say 
that  they  are  in  a position  to  state  whether  or  not  the  state- 
ments of  income  and  expenditures  made  by  the  company  are 
correct  and  that  from  their  control  and  supervision  of  the 
operation  of  the  road  they  must  also  be  in  a position  to 
know  whether  the  road  is  being  operated  efficiently  and 
whether  adequate  service  is  being  rendered. 

I have  gone  into  this  matter  considerably  in  detail  because 
I wish  to  protest  as  strongly  as  possible  against  any  attempt 
to  defer  action  upon  this  matter  on  the  ground  that  a long 
time  is  needed  for  investigation.  While  the  company  has 
not  the  slightest  objection  to  any  investigation  for  the  pur- 
pose of  finding  out  whether  the  road’  could  be  more  effi- 
ciently or  economically  managed,  it  believes,  in  view  of  the 
facts  and  information  which  are  already  in  the  possession  of 
the  Public  Service  Commission,  that  such  an  investigation, 
if  necessary,  can  be  completed  within  so  short  a time  as  not 
to  seriously  delay  the  final  action  of  this  Commission. 

After  all,  the  opinions  of  peo])le  not  familiar  with  the  con- 
ditions in  Boston  as  to  whether  or  not  they  or  some  other 
persons  could  manage  the  jirojierty  more  economically  and 
efficiently  on  the  whole  than  the  jiresent  management  has 
done  are  not  of  great  practical  value.  Ever  since  1 was  a 


258 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


boy  it  has  been  a common  saying  that  any  one  could  manage 
either  a street  railway  or  a hotel  better  than  the  actual 
manager.  The  management  undoubtedly  has  made  mis- 
takes, because  if  they  had  not,  they  would  not  be  human, 
and  undoubtedly  those  mistakes  could  be  pointed  out  by 
people  who  observed  them  after  they  are  past;  but,  on  the 
other  hand,  it  is  not  at  all  clear  that  the  people  who  point 
out  those  mistakes  might  not,  if  they  had  been  managing 
the  property,  have  made  other  and  more  serious  mistakes 
than  the  management  has  done.  It  is  one  thing  for  a person 
with  no  responsibility  to  criticize  the  acts  of  others.  It  is 
quite  a different  situation  where  a person  is  responsible  not 
only  for  the  protection  of  the  property  of  the  investors,  but 
also  for  the  due  and  proper  transportation  of  600,000,000 
passengers  a year. 

I believe  that  the  true  solution  of  the  present  situation  is 
not  along  the  lines  of  employing  people  to  express  an  opinion 
as  to  what  they  would  have  done  if  they  had  been  in  the 
place  of  the  present  Elevated  management,  but  for  the  State 
to  designate  a representative  to  sit  on  the  Board  of  Directors 
of  the  company,  to  take  part  in  its  deliberations,  and  with  a 
sense  of  the  responsibility  involved  to  take  part  in  the  de- 
termination not  only  of  questions  of  policy,  but  of  the  ex- 
penditures when  and  as  they  are  made,  and  the  company  will 
welcome  any  such  representative  on  its  Board  in  connection 
with  such  relief,  if  any,  as  this  Commission  may  decide  upon. 

The  Commission  requested  me  to  file  with  it  a state- 
ment of  the  real  estate  of  the  company  which  is  no  longer 
used  for  railway  purposes,  which  might  be  available  for  sale, 
and  I have  that  statement  here.  [Files  statement  with  the 
Commission.] 

The  question  was  also  asked  as  to  the  legal  status  of  the 
so-called  8-cent  check.  I don’t  remember  who  it  was  asked 
for  special  information,  but  I have  here  a copy  of  Mr. 
Warren’s  opinion,  and  another  oi)inion  upon  the  same  matter, 
somewhat  later. 

(’ommi.ssioner  Macleod.  I think  it  was  I who  asked  for 
that.  If  the  S-cent  check  matter  is  considered  by  this  Com- 
mission, they  are  i)roper  matters  to  have  filed  here. 


1917.] 


HOUSE  — No.  1875. 


259 


Mr.  Snow.  Would  you  like  separate  copies  for  your- 
self? 

Commissioner  Macleod.  Yes,  I think  I would:  I was 
interested  in  the  matter  to  a large  extent  because  it  is  likely 
to  come  before  us  in  connection  with  the  petition  of  the  Bay 
State  Company. 

Mr.  Snow.  I will  see  that  you  get  other  copies. 

Commissioner  Macleod.  I don’t  know,  Mr.  Snow, 
whether  suggestion  was  made  to  you  in  regard  to  drafting 
bills  embodying  in  definite  and  specific  form  the  relief  which 
the  Elevated  Company  desires  to  have  furnished  to  it 
through  legislative  action. 

jMr.  Snow.  There  has  been  such  a suggestion  informally, 
and,  as  a matter  of  fact,  I have  drawn  bills  covering  all  the 
different  possible  methods  of  relief  suggested  in  the  state- 
ment. All  of  them  I am  perfectly  ready  to  submit  as  soon 
as  fair  copies  can  be  made,  with  the  exception  of  the  Cam- 
bridge subway,  and  I confess  that  while  I have  a bill  drawn 
on  that,  it  bothers  me  a great  deal.  I am  not  at  all  satis- 
fied with  the  manner  in  which  it  is  drawn,  and  it  is  a very 
difficult  bill  to  draw. 

Commissioner  Macleod.  That  is  one  reason  we  put  it 
over  to  you  to  draw. 

]Mr.  Snow.  There  are  a number  of  questions  that,  in 
any  event,  would  have  to  be  determined  there  before  any 
final  bill  can  be  drawn. 

In  the  first  place,  what  shall  be  purchased,  who  shall 
purchase  it,  and  then  the  question,  if  it  is  to  be  bought  at 
cost,  how  that  cost  shall  be  determined.  Those  are  very 
difficult  questions  to  settle.  If  the  Commission  cares  to 
set  any  particular  date,  I shall  be  glad  to  send  them  at  any 
time  drafts  of  all  but  the  Cambridge  subway  bills,  and  I can 
complete  something  on  that  very  shortly.  I don’t  know 
whether  the  committee  would  like  to  have  enough  copies  of 
the  draft  so  that  each  member  can  have  a copy. 

Commissioner  Allen.  I should  like  that. 

Commissioner  Noyes.  I think  it  would  be  well. 

Mr.  Snow.  I will  have  enough  copies  made  so  that  each 
member  can  have  one. 


260  BOSTON  ELEVATED  RAILWAY.  [Mar. 

Commissioner  Eastman.  I would  like  to  ask,  Mr.  Snow, 
one  or  two  questions.  Mr.  Snow,  on  page  35  of  your  state- 
ment you  speak  of  expense  in  connection  with  repaving  of 
streets,  and  an  estimate  is  submitted  in  Exhibit  R for  an 
aggregate  expenditure  of  a little  over  S566,000.  Your  com- 
pany, as  I understand  it,  is  subject  to  the  provision  of  the 
Public  Statutes  of  1882,  in  regard  to  that  matter,  and  that 
law  provides  that  every  street  railway  company  ‘‘shall  keep 
in  repair  to  the  satisfaction  of  the  superintendent  of  streets, 
street  commissioner,  road  commissioners,  or  surveyors  of 
highways,  the  paving,  upper  planking,  or  other  surface 
material  of  the  portions  of  the  streets,  roads  and  bridges 
occupied  by  its  tracks,  ” etc. 

This  expenditure  of  S566,000,  as  I understand  it,  in  most 
cases  covers  the  expense  of  replacing  the  existing  paving 
with  an  improved  and  more  expensive  class  of  paving. 

Mr.  Snow.  So  I understand,  yes. 

Commissioner  Eastman.  Is  it  also  true  that  under  the 
provisions,  of  the  West  End  lease,  the  Elevated  Company 
charges  that  entire  expense  to  operating  expenses,  and  does 
not  capitalize  any  additions  or  improvements? 

Mr.  Snow.  It  is  true,  that  while  it  is  not  specifically 
mentioned  in  the  West  End  lease,  that  the  West  End  has 
refused  to  capitalize  the  cost  of  paving,  so  that  it  has  had 
to  be  charged  as  an  operating  expense. 

Commissioner  Eastman.  And  if  you  replace  an  existing 
paving  with  a new  and  more  expensive  type,  you  charge  the 
whole  sum  to  operating  expense,  and  you  do  not  capitalize 
the  improvement? 

Mr.  Snow.  Yes,  because  of  the  refusal  of  the  West  End 
Company  to  capitalize  it. 

Commissioner  Eastman.  As  other  companies  do? 

Mr.  Snow.  I understajid  that  others  do  capitalize,  it  to 
some  extent,  at  least. 

Commissioner  Eastman.  It  happens  that  we  have  the 
question  of  the  ijiter])retatioji  of  this  statute  of  1882  before 
us  in  another  case  at  the  ])resent  time,  and  I should  like  to 
know  what  your  imderstanding  is  of  the  meaning  of  the 
words  “keep  in  repair.” 


1917.] 


HOUSE  — No.  1875. 


261 


Mr.  Snow.  I have  always  understood,  Mr.  Eastman,  that 
we  were  simply  obliged  to  keep  the  paving  in  repair.  If  new 
and  improved  paving  was  laid  by  the  city,  we  were  under  no 
obligation  to  change  our  own  paving  at  the  same  time.  As  a 
practical  matter  the  Elevated  for  many  years  did,  as  a mat- 
ter of  policy,  consent  to  replace  the  paving  for  which  it  was 
responsible  with  new  and  improved  paving  when  the  rest  of 
the  street  was  repaved.  It  was  found  wise  to  do  it  as  a mat- 
ter of  policy.  Some  four  or  five  years  ago,  on  account  of  the 
financial  condition  of  the  road,  they  stopped  doing  so.  As 
you  know,  probably,  that  stirred  up  a great  deal  of  ill  feeling 
in  Boston  and  in  Cambridge,  and  the  result  was  that  they 
went  before  the  Legislature  and  tried  to  get  a new  law  passed 
which  would  extend  the  liability  of  the  company  in  the  mat- 
ter of  paving,  and  your  Commission  made  a report  to  the 
Legislature  last  year  recommending  a new  law  in  regard  to 
the  paving,  which  we  believed  would  be  very  much  more 
onerous  than  the  present  law  applicable  to  the  Boston  Ele- 
vated. 

We  were  very ‘fearful  that  the  report  would  be  accepted 
and  the  law  passed,  unless  the  city  of  Boston  could  be  forced 
to  withdraw  its  support.  In  talking  with  the  city  of  Boston, 
they  said  that  if  in  the  future  we  would  do  what  we  used  to 
do,  that  is,  take  care  of  the  paving  between  our  rails  when 
they  repaved  the  rest  of  the  street,  that  they  would  agree,  so 
far  as  they  were  concerned,  that  they  did  not  want  any  new 
law  passed. 

Consequently,  we  made  that  agreement  with  the  city  of 
Boston,  and  practically  said  that  should  apply  to  Cambridge 
and  other  places  to  prevent  the  passing  of  the  law  which 
would  be  much  more  onerous.  So  that  at  the  present  time, 
so  far  as  Boston  is  concerned,  and  Cambridge,  we  are  prob- 
ably under  obligation  whenever  they  put  in  new  paving,  to 
stand  the  expense  of  that  new  paving  between  the  rails. 

Commissioner  Eastman.  You  understood  that,  so  far  as 
our  recommendation  went,  it  provided  for  capitalization  of 
the  improvements? 

Mr.  Snow.  I understood  that.  But  we  also  understand 
that  theVork  was  to  be  done  by  the  city,  and  they  to  send 


262  BOSTON  ELEVATED  RAILWAY.  [IVIar. 

us  a bill  for  our  portion.  We  felt  that  it  would  be  much 
more  onerous. 

Commissioner  Eastman.  Under  the  statute  under  which 
you  are  acting,  do  you  think  that  that  statute  contemplated 
that  the  company  should  replace  an  existing  pavement  with  a 
new  and  improved  form? 

Mr.  Snow.  I do  not,  and  have  always  so  advised  the  com- 
pany, that  we  were  under  no  legal  obligation  to  do  so. 

Commissioner  Eastman.  So  that  this  burden  of  S566,000 
is  one  which  rests  in  statutory  application  on  an  agreement 
between  the  city  of  Boston  and  — 

Mr.  Snow.  I cannot  say  as  to  the  entire  amount,  but  un- 
doubtedly a large  part  of  it  rests  on  our  agreement  with  the 
city  of  Boston,  and  not  upon  the  statutory  provision  of  1882. 

Commissioner  Macleod.  There  are  one  or  two  questions 
in  that  connection  which  I would  like  to  ask.  You  consider 
that  the  obligation  of  the  Boston  Elevated  Railway  Company 
in  regard  to  paving  is  less  onerous  than  the  obligation  im- 
posed on  street  railway  companies  under  the  general  law,  do 
you? 

Mr.  Snow.  No,  that  is  not  what  I said. 

Commissioner  Macleod.  I know  it  is  not  what  you  said, 
but  it  rather  followed  as  a logical  inference  from  what  you 
said,  because  you  indicated  that  the  recommendations  made 
by  the  Public  Service  Commission  were  more  onerous  than 
the  exsiting  provision  in  regard  to  the  Boston  Elevated  Rail- 
way Company. 

Mr.  Snow.  And  also,  in  my  judgment,  more  onerous  as 
regards  other  street  railway  companies. 

Commissioner  Macleod.  Well,  that  is  a matter  hi  which 
the  Boston  Elevated  Company  has  had  no  experience  and  I 
don’t  think  is  in  a jiosition  to  cx])ress  an  opinion. 

hlr.  Snow.  That  may  be. 

Commissioner  IMacleod.  I know  that  the  iirincijial  rc})re- 
sentatives  of  the  street  railway  companies  that  are  under  the 
obligations  of  the  jirescnt  law  were  almost  unanimously  of 
the  ojiinion  that  the  recommendations  made  by  the  Commis- 
sion were  much  less  onerous  than  the  existing  law,  and  a very  * 
strenuous  elfort  was  made  by  rejiresentatives  of  the  princijial 
street  railways  in  the  State  to  have  that  law  passed. 


1917.] 


HOUSE  — No.  1875. 


263 


Mr.  Snow.  I understand  that  is  so,  but  I also  understand 
that  the  difficulty  is  that  under  the  existing  law  they  have  to 
pay  a compensation  tax  to  the  cities  and  towns  in  lieu  of 
paving,  and  then  they  have  to  do  a great  deal  of  paving 
besides,  getting  it  both  ways.  They  get  it  at  both  ends,  I 
understand,  but  at  the  same  time  I have  no  reason  to  know 
about  the  attitude  of  other  street  railway  companies. 

Commissioner  Macleod.  So  that  in  actual  practice,  at 
any  rate,  the  Boston  Elevated  has  some  advantage  under  the 
existing  law,  applicable  to  it,  as  compared  with  the  general 
obligations  of  the  street  railway  companies. 

Mr.  Snow.  That  may  be  true  in  the  way  in  which  it  has 
worked  out. 

Commissioner  Macleod.  Assuming  that  some  method  of 
municipal  or  State  relief  should  be  regarded  as  desirable  for 
the  company,  have  you  any  definite  suggestion  to  make  to 
this  Commission  in  regard  to  the  propriety  that  as  a special 
measure  of  relief,  if  not  as  a general  principle,  that  the  com- 
pany should  be  relieved,  either  in  whole  or  in  part,  of  the 
obligation  to  repair  or  maintain  the  streets  except  in  so  far 
as  it  is  necessary  for  the  company  to  replace  the  street  where 
it  made  changes  in  the  roadbed  in  connection  with  repairs  of 
its  own  tracks? 

Mr.  Snow.  Yes,  that  was  very  carefully  considered  as 
one  of  the  methods,  and  the  reason  why  we  did  not  state  it 
was  because  within  only  a few  months  we  hade  made  an 
agreement  with  the  city  of  Boston  in  regard  to  the  matter, 
and  felt  that  the  city  of  Boston  would  regard  it  as  bad  faith 
on  our  part,  to  come  now  and  ask  to  be  relieved  from  the 
agreement. 

Commissioner  Macleod.  As  a matter  of  sound  policy  and 
principle,  do  you  see  any  reason  why  a muiiicipality  should 
not  maintain  the  streets  for  the  benefit  of  street  car  riders 
while  the  State  maintains  them  for  the  benefit  of  those  who 
ride  in  automobiles  and  other  forms  of  public  conveyance? 

Mr.  Snow.  No,  I believe  that  this  obligation  of  the  street 
railway  companies  to  maintain  a part  of  the  paving  is  a relic 
of  the  days  when  street  railway  companies  were  required  to 
bear  the  expense  of  replacement  of  the  j)aving  between  the 


BOSTON  ELEVATED  RAILWAY. 


264 


[Mar. 


tracks  on  the  theory  that  it  was  worn  down  unduly  by  the 
travel  of  the  horses  between  the  rails. 

Commissioner  INIacleod.  Does  not  the  fact  that  pas- 
sengers are  transported  in  large  numbers  over  the  streets  by 
street  cars  operating  on  the  rails  mean  a very  much  less 
burden  on  the  streets  than  if  the  same  people  \vere  obliged 
to  travel  independently  on  the  streets? 

Mr.  Snow.  I believe  so,  absolutely. 

Commissioner  Macleod.  And  it  may  mean  that  this 
transportation,  instead  of  imposing  an  additional  burden  on 
the  streets,  may  have  done  something  to  relieve  the  streets 
from  the  ordinary  burden  of  maintenance. 

Mr.  Snow.  I belive  that  is  the  fact,  absolutely,  but,  as  I 
say,  I did  not  feel  that  we  were  in  a position  to  raise  that 
point  in  view  of  the  fact  that  we  had  just  made  that  ar- 
rangement with  the  city. 

Commissioner  Eastman.  Mr.  Snow,  I notice  throughout 
your  statement,  in  speaking  of  depreciation,  you  speak  of 
requirements  which  the  Public  Service  Commissioner  imposes. 
Now,  has  the  company  made  any  estimate  of  the  amount 
which  it  considers  necessary  for  depreciation,  in  the  interest 
of  its  own  business,  or  any  contemplation  of  how  much  pro- 
vision it  has  made  in  the  past? 

Mr.  Snow.  I have  talked  that  over  a great  deal  with  the 
officers  of  the  company,  and  I confess  that  up  to  the  present 
time  I am  not  able  to  understand  very  clearly  this  matter  of 
depreciation,  myself.  What  I supposed  was  the  fact  was  this: 
that  the  Public  Service  Commission,  sooner  or  later,  was 
pretty  apt  to  make  some  requirement  in  regard  to  deprecia- 
tion. I apprehend  that  they  may  liave  found  the  same  diffi- 
culty in  dealing  witli  it  that  tlie  company  has. 

We  believe  that  we  have  maintained  the  proi)erty  in  good 
operating  condition,  and  we  believe  that  we  have  done  a 
good  many  things  which  to  a certain  extent  offset  deprecia- 
tion. But  so  far  as  I know,  the  company  has  made  no  abso- 
lute figure,  if  that  is  your  question,  as  to  any  particular 
amount  which  ought  to  be  set  aside  for  depreciation,  other 
than  tliey  are  now  doing. 

Commissioner  Eastman.  Don’t  you  tliink  that  deprecia- 


1917.] 


HOUSE  — No.  1875. 


265 


tion  is  a matter  which  the  company  is  bound  to  determine, 
in  the  first  instance,  in  its  own  business  interest  rather  than 
something  to  be  prescribed  by  a public  authority  and  im- 
posed on  them? 

Mr.  Snow.  I think  it  is  a thing  which  they  ought  to  do  if 
they  have  the  income  to  take  care  of  it. 

Commissioner  Noyes.  Assuming  that  they  have  the  in- 
come. 

Mr.  Snow.  If  they  have  not  the  income,  they  hesitate  to 
set  aside  amounts  for  depreciation  which  may  not  finally  be 
necessary.  I think  depreciation  is  mixed  up  with  a much 
more  important  question  which  is  not  strictly  ^deprecia- 
tion,” but  is  more  the  taking  care  of  the  cost  of  what  you 
might  call  rehabilitation.  You  have  a car  which  you  may 
have  had  for  fifteen  years,  and  which  is  in  perfectly  good 
operating  condition.  Meantime,  a new  type  of  car,  a larger 
car  or  a lighter  car  has  been  devised  which  could  be  operated 
more  economically,  and  undoubtedly  the  company  could  save 
money  if  they  throw  away  the  old  car  and  buy  the  new  car. 
But  if  they  do  that,  they  suffer  an  immediate  loss  in  property 
value,  and  they  must  either  take  that  out  of  their  year’s 
earnings  — well,  I don’t  know  what  else  they  can  do,  under 
the  present  arrangement. 

Commissioner  Eastman.  If  that  is  so,  isn’t  it  true  that 
the  statute  passed  in  1914  makes  it  possible  for  a com- 
pany to  issue  bonds  and  borrow  money  in  excess  of  capital 
stock,  for  the  purpose  of  meeting  such  rehabilitation  and 
thus  spread  the  cost  over  a series  of  years? 

Mr.  Snow.  Yes,  you  are  right,  and  I ought  not  to  have 
made  my  statement  general.  The  difficulty  in  our  case  is 
that  that  does  not  apply  to  the  Elevated  situation.  Cases 
of  that  kind  relate  to  property  of  the  West  End,  and  that  act 
would  not  authorize  the  Elevated  to  issue  these  rehabilita- 
tion bonds,  if  that  is  what  you  call  them,  to  pay  for  the  loss 
on  West  End  property.  Consequently,  one  of  the  acts  which 
I have  drawn  is  an  act  extending  the  principle  of  the  act  of 
1914,  so  as  to  enable  the  Elevated  to  issue  its  own  bonds  to 
pay  for  losses  of  that  kind,  in  connection  with  the  losses  of 
the  West  End.  After  1922  it  does  not  make  any  difference,  . 


266 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


but  at  the  present  time  we  would  have  to  have  the  act  to 
cover  the  present  situation,  and  I have  drawn  an  act  on  the 
lines  you  mention. 

Commissioner  Eas™an.  Then  you  think  there  are  cases 
where  it  would  be  profitable  for  the  company  {o  adopt  that 
plan? 

Mr.  Snow.  There  is  no  question  about  that. 

Commissioner  Macleod.  Then  why  should  that  be  re- 
garded as  an  additional  expense  of  the  company?  • 

Mr.  Snow.  Because  while  the  operating  expenses  per 
day  of  a new  car  might  be  less,  you  would  have  a sub- 
stantial amount  to  charge  off  from  the  fact  that  you  de- 
stroyed the  old  car,  and  that  would  amount  in  the  first  two 
or  three  years  to  a good  deal  more  than  the  saving  in  operat- 
ing expenses.  At  the  end  of  five  or  ten  years,  you  would  be 
much  better  off,  but  not  unless  you  could  apportion  the  loss 
along  those  years. 

Commissioner  Macleod.  Assuming  that  the  legislation 
is  passed  as  you  suggest,  you  would  have  this  rehabilitation 
cost  spread  over  ten  years,  and  meantime  you  are  getting  all 
the  advantages  of  the  new  and  improved  method  or  type  of 
equipment  for  transportation,  which  is  correspondingly  lower 
on  your  operating  expenses  during  that  period? 

Mr.  Snow.  On  the  other  hand,  you  must  charge  to  your  ‘ 
income  the  proportionate  part  of  the  bonds  which  are  issued, 
so  that  one,  to  a very  considerable  extent,  offsets  the  other. 

Commissioner  Macleod.  It  prevents  you  from  getting 
the  full  effect  of  the  economies  of  operation  which  would 
otherwise  accrue? 

Mr.  Snow.  Yes,  we  believe  that  in  a long  series  of  years 
it  means  money  in  the  company’s  pocket. 

Commissioner  Eastman.  There  are  one  or  two  other 
questions  I want  to  put  to  Mr.  Snow.  I think  I know  the 
answers  to  some  of  them,  but  I would  like  to  have  them  in 
the  record. 

In  regard  to  the  contract  between  the  State  and  the 
Elevated,  under  which  the  5-cent  fare  was  imposed:  is  it 
true  that  that  contract  was  sought  and  desired  in  the  first 
• instance  by  the  company  itself? 


1917.] 


HOUSE  — No.  1875. 


267 


Mr.  Snow.  I certainly  think  that  is  a fair  statement, 
yes,  Mr.  Eastman.  I think  you  ought  to  couple  that  with 
this  statement  that  at  that  time  the  Elevated  was  not  willing 
to  attempt  to  raise  the  money  to  construct  the  rapid  transit 
lines  except  under  a guaranty  of  that  kind,  a guaranty  that 
they  should  have  a 5-cent  fare. 

Commissioner  Eastman.  It  is  true,  is  it  not,  that  there 
was  considerable  opposition  to  the  making  of  that  con- 
tract at  that  time,  on  the  part  of  the  public? 

Mr.  Snow.  Undoubtedly. 

Commissioner  Eastman.  And  is  it  true  that  the  company 
for  many  years  regarded  that  contract  as  a very  valuable 
asset? 

Mr.  Snow.  I should  -say  so,  undoubtedly. 

Commissioner  Eastman.  And  is  it  true  that  it  has  con- 
tinually insisted  that  specific  provisions  should  be  put  in  the 
general  laws  so  that  they  might  not  in  any  way  infringe  upon 
the  terms  of  that  contract? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  Such  a provision  was  put  in  the 
Public  Service  act? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  And  also  in  the  revision  of  the 
general  street  railway  statute  in  1906? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  Is  it  true  that  the  existence  of 
that  contract  prevented  the  extension  of  the  law  requiring 
half  fares  for  school  children,  to  the  Boston  Elevated  Rail- 
way? 

]Mr.  Snow.  I presume  so.  That  law  never  did  apply  to 
the  Boston  Elevated,  and  it  might  have  been  made  to  apply 
if  it  had  not  been  for  that  contract. 

Commissioner  Eastman.  I think  it  states  that  it  shall  not 
apply  to  the  Ih)ston  Elevated  during  the  life  of  that  con- 
tract. 

]Mr.  Snow.  I have  no  doubt  that  is  so. 

Commissioner  Eastman.  One  of  the  remedial  measures 
you  have  suggested  is  that  the  increase  in  fare  shall  be  per- 
mitted. Is  it  your  idea  that  the  contract  shall  be  abolished 


268 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


and  the  Elevated  Railway  Company  shall  be  put  in  the 
same  position  that  all  other  street  railways  are  in?  In  other 
words,  in  the  position  where  it  can  come  before  the  Public 
Service  Commission  and  obtain  an  increase  in  rates? 

j\Ir.  Snow.  No,  what  I think  ought  to  be  done  is  to  ex- 
tend that  contract.  It  is  because  of  that  contract  that  the 
Elevated  has  been  able  up  to  within  a few  years  to  get 
money  at  an  exceedingly  low  rate  which  every  body  will 
admit  was  for  the  public  .benefit.  I think  that  that  contract 
ought  to  contain  an  adequate  provision  protecting  the  public 
in  case  it  should  turn  out  that  the  6-cent  fare  was  more  than 
was  necessary.  I think  it  can  be  drawn  in  such  a way  that 
while  the  company  is  assured  there  will  be  no  reduction  in 
fare,  which  will  deprive  it  of  a 6 per  cent  dividend,  that,  on 
the  other  hand,  the  public  will  be  assured  that  the  minute 
that  6-cent  fare  turns  out  to  be  more  than  is  necessary  the 
fare  will  be  reduced. 

Commissioner  Eastman.  How  does  that  differ  from  the 
other  street  railway  companies,  then? 

Mr.  Snow.  It  differs  in  this  way:  that  so  far  as  other 
street  railways  are  concerned,  the  Public  Service  Commission 
has  full  authority  to  regulate  their  fares,  and  there  is  no 
established  basis  that  I know  of,  except  as  it  might  be  indi- 
cated in  the  Bay  State  decision,  as  to  the  basis  upon  which 
those  fares  will  be  fixed. 

Commissioner  Eastman.  Well,  every  company  is  pro- 
tected by  the  constitutional  provision. 

]\Ir.  Snow.  Yes,  I understand  that,  but  that  is  a last 
resort. 

Commissioner  Eastman.  What  is  there  in  this  contract 
that  makes  you  desire  to  keep  this  in  force,  even  if  you  are 
given  a 6-cent  fare? 

Mr.  Snow.  The  thing  that  the  company  desires  is  this: 
to  have  an  assurance  that  the  6-cent  fare  will  not  be  reduced 
unless  it  turns  out  that  the  earnings  are  more  than  sufficient 
to  })ay  6 i)er  cent  dividends  on  the  investment.  The  legisla- 
tive assurance  to  that  effect. 

Commissioner  Macleod.  You  think  the  Legislature  should 
give  some  special  guaranty  to  the  investment  of  the  Boston 


1917.] 


HOUSE  — No.  1875. 


269 


Elevated  that  it  is  not  prepared  to  give  to  any  other  trans- 
portation company  in  the  State? 

Mf.  Snow.  I should  not  put  it  that  way,  but  I will  say, 
as  a matter  of  fact,  it  would  be  of  great  advantage  to  the 
public  if  there  should  be  some  legislative  statement  to  the 
effect  that  all  public  service  corporations  would  be  entitled 
to  a certain  return,  and  that  their  rates  would  not  be  inter- 
fered with  to  such  an  extent  as  to  deprive  them  of  that 
return.  I believe  the  public  service  corp/orations  could  get 
their  money  much  cheaper,  and  it  would  be  to  the  interest  of 
the  public..  I do  not  personally  expect  that  the  Public 
Service  Commission  or  any  other  commission,  or  the  State, 
would  ever  intend  to  reduce  the  fares  of  the  Elevated  to  the 
point  where  they  could  not  earn  6 per  cent,  with  proper 
management.  But  I do  not  think  that  is  the  state  of  mind 
of  the  men  who  put  in  the  money.  People  who  will  invest 
capital  are  timid,  and  I think  the  State  should  lay  down  a 
policy  which  I consider  is  necessary  to  enable  the  corpora- 
tion to  get  a low  rate  for  money. 

Commissioner  Macleod.  You  think  that  should  be  done 
especially  for  the  Boston  Elevated  Railway? 

Mr.  Snow.  I think  it  would  be  wise  to  do  it  in  all  com- 
panies — some  legislative  statement  of  principle. 

Commissioner  Eastman.  You  think  that  that  contract, 
so  far  as  the  Elevated  is  concerned,  is  not  a mere  matter  of 
form,  but  amounts  to  something  for  the  company? 

Mr.  Snow.  I think  it  enables  the  company  to  get  capital 
at  a much  lower  rate  than  it  otherwise  would. 

Commissioner  Eastman.  Apart  from  the  matter  of  fare, 
it  gives  the  company  certain  privileges,  doesn’t  it? 

Mr.  Snow.  Well,  it  is  pretty  hard  to  tell  what  they  are. 
The  only  provision  in  the  contract  is  that  no  burden  shall 
be  imposed  on  it  other  than  imposed  on  all  other  com- 
panies by  the  general  law. 

Commissioner  Eastman.  Wasn’t  that  provision  made  in 
such  a way  that  the  Elevated  was  excluded  from  the  pro- 
visions of  the  so-called  compensation  tax  in  1898? 

Mr.  Snow.  I should  not  want  to  be  quoted  finally,  but  I 
am  not  sure  but  that  may  be  so;  because  it  is  provided  in 


270 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


the  Elevated  charter  that  the  special  compensation  charge  of 
seven-eighths  of  1 per  cent  shall  be  full  compensation  for  the 
the  use  of  the  streets,  and  the  compensation  tax  of  1908  for 
other  companies  put  on  a similar  tax,  if  I remember  correctly. 
So  that  you  could  hardly  expect  the  Legislature  to  impose  an 
additional  tax  to  the  one  which  the  company  is  already  pay- 
ing. 

Commissioner  Eastman.  As  I understand  it,  you  want  an 
increase  in  fares  if  the  Commission  think  it  desirable,  and 
you  also  want  a contract,  too. 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  And  you  think  that  that  con- 
tract is  a sort  of  a provision  which  ought  to  be  applied  to  all 
public  service  corporations,  whether  State  or  interstate,  in 
other  words,  a new  policy? 

Mr.  Snow.  I think  in  some  form  or  other  it  would  be  in 
the  public  interest  that  these  corporations  should  be  per- 
mitted to  earn  a certain  amount. 

Commissioner  Eastman.  You  donT  think  there  is  any 
special  reason  why  the  Elevated  should  be  singled  out  and 
given  this,  and  no  other  corporation  should  have  it? 

jNIr.  Snow.  No,  not  unless  there  is  something  in  its  obli- 
gations which  it  has  assumed  in  connection  with  the  rapid 
transit  development.  I think  it  should  be  a general  proposi- 
tion. 

Commissioner  Eastman.  You  think  that  the  laws  as  they 
stand  all  over  the  country  are  defective  because  there  is  no 
such  provision? 

Mr.  Snow.  That  is  one  way  of  putting  it.  I believe  the 
public-service  corporations  could  get  their  money  cheaper  if 
there  were  a general  principle  laid  down  as  to  the  manner  in 
which  companies  should  be  regulated.  In  just  what  form  it 
should  be  put,  I am  not  able  to  say. 

Commissioner  Eastman.  You  are  not  willing  to  rely  on 
the  i)rotection  of  the  courts? 

]\lr.  Snow.  If  you  rely  on  the  courts  to  prevent  your 
])roi)erty  from  being  confiscated,  that  is  one  thing,  but  that 
is  not  as  to  your  earnings. 

Commissioner  Eastman.  Haven’t  the  courts  used  the 
words  “fair  return”  in  construing  that  provision? 


1917.] 


HOUSE  — No.  1875. 


271 


Mr.  Snow.  ‘'Fair  return”  or  “reasonable  return.”  They 
have  said  that  the  Legislature  could  take  away  what  might 
have  been  called  a reasonable  return,  but  as  long  as  it  did  not  • 
amount  to  confiscation  they  would  not  interfere.  Nobody 
knows  quite  what  that  means. 

Commissioner  Macleod.  Do  you  know  in  any  place 
where  the  courts  have  said  that  the  fares  should  be  fixed, 
which  would  give  the  company  a rate  of  not  less  than  6 per 
cent? 

Mr.  Snow.  That  is  the  rate  fixed  in  the  Consolidated  Gas 
case  in  New  York.  I would  not  want  to  answer  that  off- 
hand. My  impression  is  that  there  is  a western  case  where 
they  held  that  5 per  cent  is  not  confiscatory.  It  was  6 per 
cent  in  the  gas  case  in  New  York. 

Commissioner  Eastman.  Not  the  Supreme  Court  of  the 
United  States? 

Mr.  Snow.  No,  not  the  Supreme  Court  of  the  United 
States. 

Commissioner  Eastman.  The  other  forms  of  relief  which 
the  company  suggests  contain  a provision  for  rebating  taxes. 
Do  you  want  a contract  for  that,  too? 

jMr.  Snow.  I think  so,  accompanied  by  the  provision  that 
if  the  earnings  of  the  company  are  sufficient,  whatever 
amount  has  been  rebated  shall  be  returned  by  the  company. 

Commissioner  Eastman.  Have  you  not  a statement,  Mr. 
Snow,  showing  what  estimate  was  made  at  the  time  when 
the  Board  of  Arbitration  in  1913  fixed  the  wages,  showing 
what  the  projected  increase  would  be? 

Mr.  Snow.  I think  I could  find  such  an  estimate. 

Commissioner  Eastman.  In  regard  to  this  question  of 
the  West*  End  capital : on  page  46  of  your  statement,  show- 
ing the  amount  of  capital  needed  by  the  system,  you  have  an 
item  of  81,308,000  for  additional  shop  facilities,  and 
$2,000,000  for  additions  to  the  power  plant  and  distributing 
system.  Is  that  for  the  needs  of  the  Elevated  alone,  and 
not  for  the  West  End  with  it? 

Mr.  Snow.  I understand  so,  Mr.  Eastman. 

Commissioner  Eastman.  Do  I understand  that  that 
power  would  not  be  used  for  running  surface  cars  or  the  shop 
used  for  surface  cars? 


272 


BOSTON  ELEVATED  RAILWAY. 


[JNIar. 


]\Ir.  Wilson  [treasurer  of  Boston  Elevated  Railway  Com- 
pany]. They  might  be.  That  is  true  to-day,  that  the  power 
station  of  the  Elevated  is  used  to  supply  power  for  the  sur- 
face cars  as  well. 

Commissioner  Eastman.  How  about  the  shops? 

Mr.  Wilson.  The  shops  would  be  used  in  part  for  cars 
on  the  surface  as  well  as  the  Elevated. 

Commissioner  Eastman.  Is  it  true  that  in  the  four 
months  of  the  present  fiscal  year  the  earnings  increased 
more  rapidly  than  they  did  in  the  same  four  months  last 
year? 

Mr.  Neal  [auditor,  Boston  Elevated  Railway].  Slightly 
more. 

Mr.  Snow.  That  is,  the  gross? 

Mr.  Neal.  Yes. 

Commissioner  Noyes.  Would  you  be  willing  to  furnish  us 
the  facts  on  the  earnings? 

Mr.  Neal.  Yes. 

Commissioner  Eastman.  This  statement,  I think,  came 
from  your  offices  [handing  paper  to  Mr.  Snow]. 

Mr.  Snow.  I think  very  likely  these  figures  are  correct, 
Mr.  Eastman,  but  I wmuld  like  to  have  an  opportunity  for 
Mr.  Neal  to  compare  them  and  then  to  state  the  result.  He 
says  he  thinks  they  are  right. 

.Commissioner  Eas™an.  They  seem  to  indicate  that 
the  increase  in  the  four  months  of  this  year  was  over  twice 
as  great  as  in  the  four  months  preceding. 

Mr.  Snow.  I could  not  tell  you  offhand.  But  I will 
have  that  verified  and  then  send  them  to  you. 

Commissioner  Swain.  To  go  back  to  that  matter  of  re- 
placing cars  once  more.  I would  like  to  ask  what  your 
practice  lias  been  in  the  past?  Wlien  your  comj^any  buys 
new  cars  and  discards  old  ones,  how  do  you  cliarge  the 
additional  cost? 

Mr.  Snow.  To  the  extent  that  that  has  been  done,  tlie 
new  cars  go  in  at  cost.  If  an  old  car  is  destroyed,  at  tlie 
same  time  there  is  credited  against  that  the  cost  when  new 
of  the  old  car.  If  tlie  old  car  and  the  new  car  cost  the 
same,  we  have  to  pay  for  the  new  car  without  getting  it 


1917.] 


HOUSE  — No.  1875. 


273 


capitalized  at  all.  If  the  new  car  costs  more  than  the  old  car 
which  is  destroyed,  we  capitalize  the  difference  between  the 
old  car  and  the  new  car. 

Commissioner  Noyes.  That  keeps  your  capital  right 
up,  then,  doesn't  it? 

Mr.  Snow.  Yes,  it  presumably  keeps  the  value  of  our 
property  equal  to  our  capital.  That  is  the  theory  of  it. 

Commissioner  Eastman.  So  far  as  the  cost  of  materials 
is  concerned  which  you  use  in  operating  expenses:  if  you 
replace  property  and  by  reason  of  the  increase  in  the  cost  of 
material,  replacement  costs  more  than  the  property  which  is 
renewed,  the  excess  is  capitalized,  isn’t  it? 

Mr.  Snow.  Theoretically,  yes. 

Commissioner  Eastman.  And  to  that  extent  the  increase 
in  prices  does  not  affect  operating  cost? 

Mr.  Snow.  No,  to  the  extent  that  it  is  used  in  replace- 
ment. 

Commissioner  Stone.  Mr.  Snow,  could  you  give  us  some 
estimate  of  the  amount  of  money  you  would  need  if  you 
were  not  required  to  make  this  renewal  to  pavement?  If  you 
were  only  compelled  to  repair  the  streets  as  you  dug  them  up, 
to  fix  your  tracks,  what  would  the  cost  be? 

Mr.  Snow.  I think  there  is  a statement  here  which  I 
believe  may  partially  answer  your  question. 

Commissioner  Ellis.  There  is  a statement  on  page  49. 

Mr.  Snow.  Yes,  and  on  page  35,  that  statement,  I think, 
of  the  expense  of  1914,  1915  and  1916,  is  supposed  to  cover 
that. 

Commissioner  Stone.  That  shows  what  you  have  done  in 
preceding  years. 

Mr.  Snow.  In  those  three  years. 

Commissioner  Stone.  That  includes  more  than  repairs. 
It  includes  more  than  the  repairs  necessitated  by  your  re- 
pairs to  track? 

Mr.  Snow.  Those  figures  were  intended  to  state  the  cost 
of  repaving  made  necessary,  not  by  our  own  repairs  to  track, 
but  the  cost  due  to  changes  by  the  city. 

Commissioner  Macleod.  That  is,  new  installation? 

Mr.  Snow.  Yes. 


274 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commissioner  Macleod.  And  not  ordinary  expense? 

Mr.  Snow.  Yes.  That  is  what  it  cost  us  in  three  years. 
Commissioner  Macleod.  How  much  of  that  would  you 
estimate  was  due  to  ordinary  repairs,  done  in  the  same  way, 
but  not  amounting  to  the  laying  of  new  paving? 

Mr.  Snow.  That  I can  give  you,  but  it  is  a substantially 
larger  sum.  The  cost  of  ordinary  repairs  which  we  would 
have  to  make  new,  and  especially  the  cost  of  repairing  the 
paving  where  our  rails  are  changed  — 

Commissioner  Macleod.  I did  not  mean  that,  but  the  • 
cost  of  repairs  as  distinguished  from  new  installations  which 
you  are  required  to  assume  by  the  city,  and  excluding  such 
repairs  as  you  make  when  you  are  paving,  or  ties  and  rails? 

Mr.  Snow.  I doubt  whether  we  have  got  your  exact  ques- 
tion, so  that  we  can  answer  it.  Would  you  mind  repeating 
your  question? 

Commissioner  Macleod.  I wanted  to  find  out,  and  I can, 
perhaps,  preface  my  statement  by  saying  that  I understand 
this  statement  on  page  35  represents  merely  the  cost  of  in- 
stallation of  new  paving  as  distinguished  from  repairs  and 
maintenance  done  under  the  direction  or  at  the  request  of  the 
city,  or  in  compliance  with  the  legal  obligations  of  the  com- 
pany to  repair  and  maintain  its  track.  Is  that  correct? 

Mr.  Neal.  Yes. 

Commissioner  Macleod.  It  represents  the  new  installa- 
tion as  distinguished  from  repairs  and  maintenance  which  the 
company  is  under  obligation  to  make? 

i\Ir.  Snow.  May  I make  this  suggestion?  We  shall  be 
very  glad  to  furnish  you  with  a statement  in  detail  — * 

Commissioner  ]Macleod.  In  other  words,  let  me  put  it  in 
this  way  before  you  make  the  statement:  that  this  S566,000 
represents  what  the  city  does  in  excess  of  what  you  believe 
the  city  would  be  obliged  to  do  under  your  interpretation  of 
the  law? 

]\Ir.  Snow.  That  S56(),()()0  represents  an  ex])ense  which  I 
do  not  think  we  would  be  compelled  to  go  to  under  the  Public 
Statutes  of  1SS2.  Now,  I will  be  very  glad  to  furnish  you 
with  a detailed  statement  of  the  expense  of  paving  — 

('ommissioner  ^Iacleod.  'Sly  other  (question,  then,  might 


1917.] 


HOUSE  — No.  1875. 


275 


be  put  in  this  form:  What  amount  of  expense  has  been  in- 
volved due  to  compliance  with  the  provisions  of  that  law 
construed  as  you  understand  it  legally  should  be  construed? 

Mr.  Snow.  I think  we  can  take  our  count  for  the  year  and 
analyze  it  and  get  the  answer  which  you  want. 

Commissioner  Russell.  Mr.  Snow,  the  city  of  Boston, 
through  its  law  department,  has  maintained  or  contended  for 
a different  construction  of  that  provision  of  the  law. 

Mr.  Snow.  I did  not  know  the  law  department  ever  had. 
Whoever  has  charge  of  the  paving  claimed  that  we  ought  to 
do  something  else,  but  I didn’t  know  the  law  department 
took  that  position. 

Commissioner  Russell.  There  has  been  no  serious  con- 
tention there  on  the  part  of  the  city  to  the  contrary  of  your 
construction? 

Mr.  Snow.  I never  supposed  there  had  been,  because  I 
have  always  supposed  the  statute  was  perfectly  clear.  As  a 
matter  of  fact,  however,  the  company  until  within  a few 
years  had  done  this  work  at  its  own  expense. 

George  A.  Flynn,  Esq.,  Assistant  Corporation  Counsel  of 

Boston. 

May  I state  briefly  what  I understand  to  be  the  position 
of  the  city  of  Boston? 

I do  not  know  that  the  law  department  has  ever  passed  on 
that  subject,  but  I understand  it  has  been  the  position  of  the 
city  officials  that  it  would  be  impossible  for  the  street  rail- 
ways to  keep  the  surface  of  the  streets  between  their  rails  in 
proper  repair  unless  they  installed  new  paving  when  the  city 
lays  new  paving.  The  opinion  of  our  engineers  is  that  it  is 
cheaper  in  the  long  run  for  the  Elevated  to  make  repairs 
when  we  change  the  condition  of  the  paving  of  the  streets. 

In  the  downtown  streets  where  the  traffic  is  very  heavy, 
it  is  almost  the  uniform  practice  to  lay  a concrete  base  from 
curb  to  curb  as  a foundation  for  the  granite  block  paving, 
the  joints  of  which  are  grouted  with  concrete.  If  that  was 
not  done,  and  concrete  laid  in  two  beds,  one  from  the  curb 
to  the  track  of  the  Elevated,  and  the  same  operation  on  the 
other  side  of  the  street,  it  would  be  but  a very  short  time 


276 


BOSTON  ELEVATED  RAILWAY. 


[^lar. 

before  the  operation  of  these  very  heavy  cars  on  that  street 
would  break  down  the  condition  of  the  pavement  between 
the  rails  of  the  Elevated,  and  then  it  would  be  a more  expen- 
sive proceeding,  not  only  for  the  Elevated,  but  for  the  city, 
to  tear  up  the  street  between  the  tracks  and  to  install  this 
concrete  bed,  as  a foundation,  and  then  for  the  Elevated  to 
relay  or  repave  the  street. 

I suppose  that  this  duty  was  cast  upon  the  street  railway 
originally  because  of  the  wear  and  tear  on  the  pavement 
between  the  rails  of  the  horse-drawn  car  constituting  a 
special  burden  on  the  street. 

Now,  I would  submit  to  this  Commission  the  question  of 
whether  the  use  of  these  very  heavy  cars  does  not  constitute 
a very  heavy  burden,  due  to  the  vibration  on  the  pavement 
covering  the  entire  street  from  curb  to  curb.  I know  our 
engineers  feel  that  the  vibration  caused  by  these  very  heavy 
cars  tends  to  break  up  our  pavement  and  make  its  life 
shorter.  I did  not  expect  this  question  to  arise  to-day,  and 
I am  only  giving  you  what  I know  from  my  experience  in 
the  office,  without  special  investigation  to  meet  the  sugges- 
tion of  the  railway  that  perhaps  they  should  be  relieved  of 
that  burden.  But  I am  sure  that  the  city  engineers  feel, 
and  the  law  department  would  feel,  that  the  street  railway 
could  not  keep  the  street  in  repair  between  the  rails  unless 
it  carries  out  this  present  policy  with  the  city.. 

Commissioner  Macleod.  You  understand  that  is  a ques- 
tion of  expenditure  rather  than  an  interpretation  of  the 
statutes? 

Mr.  Flynn.  I think  the  question  never  has  been  passed 
upon  by  the  law  department,  as  a matter  of  law,  as  to  what 
is  proper  construction  under  the  statute. 

Commissioner  Eastman.  Has  it  been  passed  upon  by  the 
courts? 

Mr.  Flynn.  No,  sir.  There  is  one  case  where  it  says 
that  this  statute  does  not  require  the  company  to  fill  in 
excavations,  but  merely  to  replace  the  surface. 

Commissioner  Allen.  Mr.  Flynn,  did  you  have  any  case 
in  mind  where  there  has  been  a granite  block  paving  with  a 
concrete  base  laid  in  the  city  of  Boston,  where  the  use  of  the 


1917.] 


HOUSE  — No.  1875. 


277 


surface  cars  has  cracked  that  pavement  or  injured  it  in  any 
way? 

Mr.  Flyxn.  No,  I have  not,  because  I understand  in  all 
cases  where  the  city  has  laid  such  a pavement,  the  Elevated 
has  co-operated,  and  the  city  has  laid  the  concrete *base  from 
curb  to  curb,  under  the  rails  of  the  Elevated,  or  the  West 
End,  and  then  the  Elevated  has  paid  the  cost  of  laying  the 
pavement  merely  between  the  rails.  We  have  always  feared 
that  if  the  Elevated  did  not  co-operate  with  us  the  pavement 
would  go  to  pieces  in  no  time. 

Commissioner  Allen.  Your  statement  was  based  solely 
upon  an  assumption  that  nothing  had  been  done  with  the 
pavement  between  the  rails  at  all? 

Mr.  Flynn.  Yes. 

Commissioner  Allen.  That  it  did  not  coincide  with  the 
other  at  all? 

]Mr.  Flynn.  Assume  a granite  paved  street  without  a 
concrete  foundation,  and  the  traveled  portions  of  the  road 
are  worn  out,  and  the  city  decides  to  repave  that  street  with 
a concrete  base.  The  opinion  of  our  engineers  is  that  if  they 
laid  a bed  of  concrete  from  the  curb  to  the  nearer  rail  of  the 
Elevated  track,  and  stopped  there  and  did  not  put  in  a 
concrete  base  between  the  tracks,  it  would  be  but  a short 
time  before  our  concrete  would  break  and  but  a short  time 
before  the  old-fashioned  granite  blocks  between  the  rails 
would  go  to  pieces,  and  then  it  would  be  necessary  for  the 
Elevated  to  comply  with  the  statutory  obligations  to  keep 
the  surface  between  the  rails  in  repair. 

Commissioner  Allen.  I only  asked  if  you  knew  of  such' 
a case,  because  we  are  interested  in  it  also. 

Mr.  Flynn.  I understand  there  is  no  such  case,  because 
the  Elevated  has  always  co-operated. 

Commissioner  Allen.  It  is  a matter  of  opinion  of 
engineers? 

Commissioner  Macleod.  Do  you  think  that  such  a mat- 
ter of  disintegration  of  the  surface  of  the  street,  due  to 
operating  railroad  cars,  is  as  large  a factor  as  the  amount  of 
disintegration  of  the  surface  between  the  track,  owing  to  the 
use  of  those  by  other  vehicular  traffic  than  the  cars? 


278 


BOSTON  ELEVATED  RAILWAY. 


[War. 


Mr.  Flynn.  I could  not  answer  that  question;  I don’t 
know. 

Frederic  E.  Snow,  Esq.,  Resumed. 

Commissioner  Swain.  I want  to  ask  again  about  that 
$566,000.  * That  is  an  expense  which  the  company  would  not 
be  put  to,  to  maintain  its  own  tracks? 

Mr.  Snow.  Yes. 

Commissioner  Swain.  On  page  49  you  have  a statement 
of  money  needed  for  operating  expenses  for  the  current 
fiscal  year: 

Additional  expense  due  to  repaving  of  streets,  $200,000;  this  upon  the 
supposition  that  one-half  the  repaving  shown  in  Exhibit  R is  done 
during  the  present  fiscal  year. 

Mr.  Snow.  Yes. 

Commissioner  Swain.  That  $200,000  is  not  one-half  of 
$566,000.  ' 

Mr.  Snow.  No. 

Commissioner  Swain.  Where  is  the  other  half? 

Mr.  Snow.  I assume  $200,000  for  the  year  ending  June 
30,  1917,  and  $200,000  for  the  year  ending  June  30,  1918. 
That  takes  only  $400,000  out  of  a total  of  $566,000.  I am 
simply  estimating  the  increase.  For  the  three  years  1914, 
1915  and  1916,  we  were  put  to  an  expense  of  something  over 
$200,000  in  those  three  years,  so  that,  as  a matter  of  fact, 
the  $200,000  is  a very  low  estimate.  But  the  $200,000  is  in 
addition  to  the  amiount  we  are  now  spending  for  similar 
purposes.  We  estimate  it  $566,000.  What  I should  have 
done,  to  be  absolutely  accurate,  would  be  to  take  $566,000, 
deduct  the  average  amount  we  have  s])ent  in  three  years, 
and  then  divide  the  balance  by  two.  As  a matter  of  fact, 
this  being  a rough  estimate,  we  called  it  a round  $200,000, 
so  as  not  to  a])j)ear  to  be  making  it  any  more  than  necessary. 
That  is  the  way  it  was  arrived  at,  and  it  is  not  an  accurate 
figure.  To  a certain  extent  it  is  guesswork. 

Commissioner  Noyes,  in  your  statement  this  mornijig 
you  said  there  were  two  or  three  items  in  addition  to  the 
ones  mentioned  in  the  formal  statement  before  you,  which 


1917.] 


HOUSE  — No.  1875., 


279 


might  add  to  your  burden.  One  was  the  Federal  corporation 
tax,  and  another  was  the  income  tax.  Will  you  tell  me 
what  you  estimate  it  will  be? 

Mr.  Snow.  Well,  the  Federal  corporation  tax  depends  on 
the  income,  and  we  can  estimate  that,  assuming  what  the 
business  will  be.  The  other  is  somewhat  different,  and  we 
can  only  tell  what  it  would  be  figured  on  the  basis  of  a cer- 
tain value. 

Commissioner  Macleod.  In  our  consideration  of  the  finan- 
cial situation  of  the  Boston  Elevated,  and  the  facts  and 
figures  which  are  presented  by  the  company,  and  what  may 
be  developed  by  this  Commission  through  its  own  investiga- 
tion, is  it  your  contention,  in  making  the  estimate  of  the 
needs  of  the  company,  that  we  should  assume  that  the  com- 
pany should  have  a certain  amount  of  additional  revenue  to 
provide  for  depreciation  to  a larger  extent  than  it  has  been 
provided  in  the  past,  and,  if  so,  what  figure  do  you  suggest 
as  representing  such  necessary  increase,  to  provide  for  depre- 
ciation? 

Mr.  Snow.  No;  I do  not  make  any  suggestion  that  you 
should  allow  any  additional  figure  for  depreciation  as  such. 
I do  believe,  however,  that  there  should  be  some  allowance 
made  on  the  theory  that  we  may  issue  capital  to  pay  for 
the  losses  in  connection  with  rehabilitation  and  reconstruc- 
tion, and  that  there  should  be  an  allowance  made  for 
amortizing  that  debt. 

Commissioner  Macleod.  Do  you  mean  that  there  should 
be  some  allowance  for  so  much  of  the  depreciation  as  repre- 
sents obsolescence? 

Mr.  Snow.  Well,  if  by  “obsolescence”  you  mean  the 
.replacement  of  equipment  or  other  property,  which  is  still  in 
serviceable  condition,  because  you  have  something  better 
that  has  been  developed  — 

• Commissioner  Macleod.  That  is  the  sense  in  which  I 
have  used  the  word,  and  I think  that  is  the  sense  in  which 
it  is  ordinarily  used. 

Mr.  Snow.  Yes,  in  that  sense,  but  there  is  another  — 

Commissioner  Macleod.  Can  you  give  us  any  figures  on 
that  basis? 


280 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Snow.  We  have  no  figures  to  submit  at  the  present 
time.  I presume  we  could  make  an  estimate,  but  it  would 
be  an  estimate. 

Commissioner  Macleod.  I think,  if  we  are  to  consider 
these  factors,  we  ought  to  have  the  judgment  of  the  com- 
pany. 

Mr.  Snow.  Eor  instance,  in  the  list  I have  submitted  to 
you  to-day  of  real  estate,  you  will  find  that  there  is  a consid- 
erable amount  of  real  estate  which  could  be  sold,  but  which 
cannot  be  sold  for  anything  like  its  cost.  There  is  an  im- 
mediate loss  if  we  should  sell  to-day.  The  thing  to  do,  if  we 
could  take  care  of  that  loss  in  any  way,  is  to  sell  it  and  turn 
that  property  into  cash,  to  save  the  issuing  of  that  much 
cash;  but  if  it  shows  a loss  of  $200,000,  what  will  we  do 
with  it? 

Commissioner  Macleod.  Charge  it  to  surplus. 

Mr.  Snow.  We  have  no  surplus. 

Commissioner  Macleod.  Then  increase  your  net  loss. 

Mr.  Snow.  That  will  reduce  our  operating  income. 

Commissioner  Eastman.  You  have  $200,000. 

Mr.  Snow.  Well,  how  much  is  it?  Have  we?  Yes,  we 
have  got  $200,000,  but  I am  afraid  you  will  find  more  than 
that. 

Commissioner  Swain.  Suppose  you  have  renewed  cars, 
not  on  account  of  obsolescence,  but  on  account  of  deprecia- 
tion. Suppose  they  wear  out  and  you  have  to  replace  a large ' 
number  of  cars  with  cars  of  the  same  kind,  so  that  there  is  no 
increase  in  the  capital  at  all. 

]\Ir.  Snow.  Yes. 

Commissioner  Swain.  Do  you  want  a fund  for  that  pur- 
pose? 

iMr.  Snow.  Yes. 

Commissioner  Swain.  Did  I understand  you  to  say  to 
jMr.  Macleod  that  you  did  not  think  there  ought  to  be  any 
charge  for  the  requirements  of  dej)reciation? 

■Mr.  Snow.  I should  call  that  — there  are  three  things  we 
have  talked  about,  — depreciation,  rehabilitation,  and  recon- 
struction. 

Commissioner  Noyes.  There  are  four,  — obsolescence. 


1917.] 


HOUSE  — No.  1875. 


281 


Mr.  Snow.  Where  the  line  is,  I don’t  know.  So  far  as 
depreciation  is  concerned,  I consider  that  these  properties 
have  been  kept  in  good  condition,  and  while  part  of  the 
property  is  older  than  it  was,  and  therefore  there  is  theo- 
retical depreciation,  we  have  expended  other  moneys  on 
these  properties  which  offset  that  theoretical  depreciation. 
So  that  when  you  come  to  talk  about  depreciation  merely 
because  the  thing  has  grown  a little  older,  I don’t  think  that 
we  want  to  suggest  that  any  amount  should  be  set  aside  for 
that  particular  purpose.  Each  year  the  car  is  ‘one  year  older 
than  when  it  started.  If  the  life  of  the  car  is  fifty  years,  you 
ought  to  set  aside  a certain  percentage  each  year.  That  kind 
of  percentage  I don’t  think  we  shoud  be  obliged  to  set  up. 

Commissioner  Ellis.  Why  not?  It  is  part  of  the  cost  of 
operation. 

Mr.  Snow.  I understand,  but  we  do  other  things  which 
offset  that.  For  instance,  we  pay  for  the  paving  and  are  not 
capitalizing  it  at  all.  Every  time  we  put  in  better  rails, 
although  it  costs  more,  we  cannot  capitalize  them,  and  that 
goes  into  the  property  and  offsets  this  depreciation. 

Commissioner  Ellis.  We  cannot  tell,  then,  without  mak- 
ing up  a detailed  statement  of  it,  showing  on  one  side  the 
affirmative  of  the  depreciation,  and  showing  on  the  other 
side  the  negative  of  it. 

Mr.  Snow.  That  is  true,  and  that  is  the  fundamental 
difficulty  with  the  way  the  West  End  accounts  have  been 
kept,  that  they  don’t  show  in  themselves  this  offset  of  de- 
preciation. They  don’t  show  depreciation  on  one  side,  and 
the  improvement  in  the  property  on  the  other.  They  ought 
to  show  it,  but  they  don’t,  and  we  have  to  dig  it  out. 

Commissioner  Macleod.  A good  deal  of  your  deprecia- 
tion is  taken  care  of  under  the  present  method  through  pro- 
gressive repairs,  is  it  not?  Assume  that  the  life  of  the  rail  is 
ten  years,  and  you  renew  out  of  operating  expenses  each 
year  one-tenth  of  your  track.  You  would  get  a distribution 
of  your  charges  in  that  way  which  would  accomplish  the 
same  thing  as  making  your  repairs  all  at  one  time  and  having 
to  go  to  the  depreciation  fund  which  had  been  accumulated 
during  the  previous  years. 


282 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Snow.  Yes. 

Commissioner  Eastman.  Isn’t  it  true  that  you  had  a 
depreciation  fund  which  amounted  last  year  to  $607,000,  and 
that  during  that  year  you  did  charge  to  that  fund  the  value 
of  a number  of  old  cars  which  you  scrapped? 

]\Ir.  Snow.  Yes,  sir. 

Commissioner  Eastman.  So  that  at  the  end  of  the  year 
the  depreciation  fund  was  somewhat  less? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  And  isn’t  it  also  true  that  the 
West  End  has  a fund  of  which  the  Boston  Elevated  is  the 
trustee,  amounting  to  $1,500,000,  the  income  of  which  is  to 
be  used  from  1922,  to  retire  a certain  amount  of  West  End 
stock? 

Mr.  Snow.  Yes,  it  will  be  Elevated  stock  at  that  time. 

Commissioner  Eastman.  That  is  a provision  for  deprecia- 
tion, isn’t  it? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  Isn’t  it  true  that  last  year  you 
set  aside  a certain  amount  for  depreciation  on  ways  and 
structures? 

IVIr.  Snow.  [Confers  with  Mr.  Neal.]  Mr.  Neal  will  have 
to  explain  that.  I cannot. 

Commissioner  Eastman.  I want  to  ask  him  whether  it  is 
common  practice  for  street  railway  companies  or  steam 
railroad  companies  to  set  aside  anything  for  depreciation  on 
ways  and  structures? 

Mr.  Neal.  It  is  not,  but  I took  $80,000  and  charged  it 
against  an  operating  expense  account  called  depreciation  of 
ways  and  structures,  and  I credited  that  account  to  deprecia- 
tion reserve.  Then,  when  we  were  settling  bills  against  the 
West  End  Street  Railway  Company,  instead  of  charging  off 
that  j)aving  direct  to  operating,  I then  charged  it  to  depre- 
ciation reserve. 

The  benefit  was  this:  In  settling  ])revious  West  End  bills 
the  matter  of  paving  was  charged  directly  into  operating,  as 
Mr.  Stone  says,  and  you  never  knew  where  you  were  at. 
By  putting  it  against  this  dei)reciation  reserve,  it  shows  how 
much  of  this  sort  of  thing  you  had,  and  at  the  same  time  by 


1917.] 


HOUSE  — No.  1875. 


283 

putting  an  equal  amount  of  money  into  the  depreciation 
reserve  you  offset  it.  Therefore  your  operating  is  just  the 
same  as  though  you  charged  it  there  in  the  first  place,  but 
by  doing  it  through  depreciation  reserve  you  have  the  ad- 
vantage of  knowing  what  is  being  done.  If  the  books  were 
kept  in  the  same  way  as  previous  years,  it  would  not  show 
that  any  amount  had  been  charged  off  to  depreciation  of 
ways  and  structures,  and  yet  there  was. 

Commissioner  Eastman.  Isn’t  it  the  ordinary  practice 
of  steam  railroads  and  street  railways,  for  the  ^depreciation 
on  ways  and  structures  to  strike  an  average  amount  and  to 
have  that  handled  through  the  maintenance  account  without 
a special  fund  for  that  purpose? 

Mr.  Neal.  On  track  and  wires  it  appears  that  the  aver- 
age life  of  a track  is  determined  by  the  safe  condition.  If 
you  keep  your  road  up  to  a certain  safe  condition  there  never 
can  be  over  a certain  amount  of  depreciation.  But  with  the 
car,  that  is  finally  and  absolutely  gone.  There  is  100  per 
cent  of  depreciation  in  that.  But  we  will  assume  that  the 
railroad  which  is  operating  will  always  keep  this  track  up  to 
70  per  cent.  If  you  keep  it  up  to  70  per  cent,  you  should 
never  set  aside  more  than  30  per  cent.  After  you  have  set 
aside  the  30  per  cent  you  are  not  going  to  repair  any  faster 
than  you  need  to,  and  what  will  you  do  with  it?  If  you 
want  to  express  values  on  your  books,  you  must  set  that 
30  per  cent  aside  in  some  definite  form. 

Commissioner  Eastman.  As  a matter  of  general  practice 
that  is  not  done,  is  it? 

Mr.  Neal.  The  small  road  would  have  to  do  it.  Take 
the  little  Nahant  Road,  and  they,  if  they  had  no  deprecia- 
tion reserve  for  their  track  when  it  wore  out,  would  go  broke 
because  they  could  not  rehabilitate  it.  But  if  it  is  a large 
road  and  there  is  a certain  amount  of  repair  and  recon- 
struction each  year,  then  it  is  not  necessary. 

Commissioner  Eastman.  Most  roads  do  it,  don’t  they? 

Mr.  Neal.  I think  that  is  true. 

Commissioner  Quincy.  Something  has  been  said  about 
the  passage  of  the  charter  by  the  Legislature.  Is  it  not  the 
fact  that  the  passage  of  the  charter  in  1897  was  the  result 


284 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


of  some  years  of  public  agitation  in  favor  of  rapid  transit, 
as  well  as  other  elements  which  entered  into  the  situation? 

Mr.  Snow.  Yes.  Of  course  the  original  act  was  the  act 
of  1894  which  provided  not  only  for  the  building  of  the 
Elevated  Road,  but  also  applied  to  the  Tremont  Street  sub- 
.way,  and  the  act  of  1897  was  a modification  of  the  act  of 
1894,  because  it  was  felt  that  under  the  act  of  1894  the  pro- 
visions were  not  such  as  to  induce  new  capital  to  be  invested. 

Commissioner  Quincy.  It  had  not  been  found  possible  to 
get  any  capital,  as  a matter  of  fact? 

Mr.  Snow.  They  could  not  get  any  capital  under  the  act 
of  1894. 

Commissioner  Quincy.  Isn’t  this  a fair  statement:  That 
the  act  of  1894  represented  a trade  in  the  Legislature,  with 
capitalists  who  w^ere  willing,  under  certain  amendments  to 
the  terms  of  the  act  of  1894,  to  come  forward  and  provide 
capital  for  transportation  facilities? 

hlr.  Snowu  Yes,  that  was  the  arrangement. 

Commissioner  Swain.  And  the  act  of  1894  provided  also 
for  the  construction  of  additional  subways? 

Mr.  Snow.  This  is  not  for  repetition,  and  not  for  the  record, 
but  — 

Commissioner  Macleod.  I suppose  in  regard  to  this  con- 
tract it  is  a fair  comment  to  make  that  the  fact  that  it  was 
voluntarily  entered  into  by  the  Legislature,  representing  the 
public,  and  by  the  company  itself,  indicated  that  both  par- 
ties to  the  contract  believed  in  its  fairness? 

Mr.  Snow.  I think  the  statement  carries  its  own  answer. 

Commissioner  Quincy.  Isn’t  your  situation  radically  dif- 
ferent from  that  of  other  street  railway  corporations  and  pub- 
lic service  corporations  in  this  Commonwealth,  in  several  im- 
portant respects,  and  isn’t  this  one  of  the  resi)ects,  that  you 
have  leased  at  the  request  of  the  public,  or  partly  by  the 
desire  of  the  •[)ublic  and  ])artly  the  desire  of  those  to  be 
benefited,  S30,()0(),()00  and  u])wards  of  public  property? 

]\Ir.  Snow.  That  is  undoubtedly  true,  of  course.  The 
other  street  railway  c()m})anies  have  not  assumed  obligations 
of  that  kind.  • Of  course  I do  not  want  this  Commission  to 
understand  that  we  are  here  claiming  any  special  merit  for 


HOUSE  — No.  1875. 


285 


1917.'] 


the  Boston  Elevated.  That  is  not  the  ground  we  come  up 
here  on.  We  simply  come  up  here  and  state  what  the  situa- 
tion is.  No  matter  how  it  arose,  here  is  the  existing  situa- 
tion, and  the  question  for  this  Commission  is  whether  it  is 
for  the  interest  of  the  public  as  a whole  that  this  situation 
should  be  remedied.  We  are  not  asking  it  on  the  ground  of 
any  claim  which  the  Boston  Elevated  has  got.  While  I 
believe-  the  stockholders  are  entitled  to  a fair  return,  I am 
not  putting  it  on  that  ground. 

We  say,  “Here  is  a situation  in  which  the  public  is  inter- 
ested. No  matter  how  we  got  there,  no  matter  what  the 
equities  are,  what  is  going  to  be  done?” 

Commissioner  Quincy.  If  it  turns  out  in  the  public  inter- 
est that  it  is  best  to  further  increase  the  subway  system  of 
the  city  of  Boston,  does  not  that  include  some  very  impor- 
tant differences  in  the  case  of  the  Boston  Elevated,  which  do 
not  enter  into  that  of  any  other  street  railway  of  the  Com- 
monwealth? 

Mr.  Snow.  Of  course  that  is  entirely  different  from  any 
other  street  railway  in  this  Commonwealth.  Mr.  Matthews, 
in  his  statement,  attacked  the  so-called  arrangement  with  the 
Interborough  system  in  New  York.  So  far  as  my  statement 
is  concerned,  I have  not  advocated  any  particular  arrange- 
ment for  future  subways,  but  I quoted  the  Interborough 
arrangement  as  showing  that  in  other  cities  they  have  recog- 
nized the  equity  of  the  public  paying  some  part  of  the  cost  of 
these  new  subways.  As  a matter  of  fact,  the  Brooklyn  Rapid 
Transit  Company  have  recently  made  a similar  contract  with 
the  city  of  New  York,  and  the  city  of  Philadelphia,  as  stated 
in  my  brief,  is  up  against  the  same  proposition.  And  Mr. 
Twining,  director  of  city  transit  of  Philadelphia,  is  of  the 
opinion  that  the  city  of  Philadelphia  has  got  to  bear  a part 
of  the  cost. 

Senator  Bates.  Has  any  attempt  been  made  between  your 
company  and  the  Bay  State  Company  to  eliminate  the  abuse 
of  the  8-cent  check? 

Mr.  Snow.  No,  it  has  been  a matter  under  discussion.  I 
cannot  say  that  there  has  been  any  action. 

Senator  Bates.  Why  isn’t  it  perfectly  possible  to  do  that 


286 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


with  different  forms  of  checks,  so  that  they  could  be  used 
only  in  certain  directions,  and  within  certain  hours?  Why 
would  not  that  remove  all  just  complaint  which  your  com- 
pany would  have  on  the  8-cent  check? 

Mr.  Snow.  I cannot  tell  you  whether  it  would  be  possible 
or  not.  I think  at  the  present  time  the  Bay  State  has  asked 
to  be  relieved  absolutely  from  the  8-cent  check. 

Senator  Bates.  Then  there  would  not  be  any  difficulty  in 
legislation  on  that  ground  from  the  Bay  State  Company? 

Mr.  Snow.  No,  but  I think  the  Bay  State  Company  as 
well  as  the  Elevated  wants  to  be  rid  of  the  abuse,  and  not 
only  that,  but  to  be  rid  of  it  entirely.  It  means  that  the 
Elevated  gets  4 cents  fare  instead  of  5 cents,  and  the  Bay 
State  gets  4 cents  instead  of  5 cents. 

Senator  Bates.  You  don’t  know  why  they  never  have 
made  the  same  division  that  you  have,  in  having  a morning 
and  an  afternoon  check? 

Mr.  Snow.  No,  T could  not  tell  you. 

Commissioner  Macleod.  Is  it  your  contention  that  it  is 
necessary  that  the  whole  or  substantially  the  major  part  of 
the  relief  which  you  ask  for  should  be  granted,  in  order  to 
maintain  the  dividends  of  the  company  at  the  present  basis? 
Or  do  you  believe  that  unless  that  is  done  the  dividends  of 
the  company  are  likely  to  fall  below  5 per  cent? 

Mr.  Snow.  I believe  that  unless  there  is  a provision  made 
for  a 6-cent  fare,  or  a provision  made  for  rebating  the  taxes, 
that  in  the  first  place  the  company  cannot  earn  G per  cent. 
In  my  judgment,  so  far  as  you  can  base  any  opinion  upon 
known  facts,  it  cannot  continue  to  earn  even  as  high  as  5 per 
cent;  but  it  has  been  said  that  my  opinion  in  regard  to  those 
matters  is  not  very  reliable.  It  is  merely  an  estimate. 

Commissioner  Macleod.  So  that  you  consider  that  the 
impending  financial  difficulty  of  the  company  is  something 
more  than  its  inability  to  pay  6 ])er  cent  rather  than  5? 

Mr.  Snow.  Oh,  yes,  absolutely. 

Commissioner  Noyes.  ]\Ir.  Snow,  I would  like  to  follow 
u])  a little  further  the  matter  of  the  sale  of  this  land.  If  you 
know,  or  if  all  hands  know  that  the  land  is  being  carried  on 
the  books  at  j)rice  far  in  excess  of  what  you  might  get  for  it 


1917.] 


HOUSE  — No.  1875. 


287 


to-day,  and  that  in  the  natural  order  of  things  it  might  de- 
preciate more  next  year  and  the  year  after,  why  isn’t  this 
the  time  to  operate  and  cut  out  the  appendix  at  once  and 
save  further  suffering? 

Mr.  Snow.  But  nobody  thinks  it  will  depreciate  further. 

Commissioner  Noyes.  Well,  will  it  not? 

Mr.  Snow.  Everybody  thinks  next  year  we  will  get  a 
better  offer.  Some  of  the  real  estate  has  gone  up. 

Commissioner  Eastman.  And  you  don’t  want  it  under- 
stood that  all  the  real  estate  which  you  own  is  depreciating 
in  value? 

Mr.  Snow.  Oh,  no. 

Commissioner  Eastman.  And  that  you  could  not  sell 
some  of  it  for  more  than  it  cost? 

Mr.  Snow.  I think  we  could  sell  some  of  it  for  more  than 
it  cost. 

Commissioner  Eastman.  The  Huntington  Avenue  ball 
grounds? 

Mr.  Snow.  That  Huntington  Avenue  ball  grounds  has 
been  undoubtedly  increasing  in  value,  and  it  ought  to  come 
pretty  near  taking  care  of  a lot  of  depreciation  on  the  other 
real  estate. 

Commissioner  Noyes.  That  is  what  I mean.  I did  not 
mean  to  sell  in  the  face  of  rising  markets,  but  if  all  the  in- 
formation which  you  have  indicates  that  you  won’t  get  more 
next  year  or  the  year  after,  why  not  sell  it  now? 

Mr.  Snow.  Well,  we  should  but  we  hate  to  charge  it  to 
operating  income. 

Commissioner  Noyes.  You  ought  to  be  prepared  to 
charge  it  in  some  other  way. 

Mr.  Snow.  That  is  what  we  want  to  do. 

Commissioner  Macleod.  If  you  assume  that  there  is 
some  other  arrangement  by  which  a guaranty  of  5 per  cent 
return  to  the  stockholders  can  be  had,  rather  th^in  a 6 per 
cent  return,  is  it  your  opinion  that  the  stock  will  not  be 
marketable  at  par  under  that  arrangement? 

Mr.  Snow.  I don’t  know  that  my  opinion  is  worth  very 
much  on  that.  Generally  speaking  a stock  sure  of  5 per 
cent,  free  of  taxes,  ought  to  sell  at  par  in  Massachusetts  and 


288 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


there  is  no  question  about  that.  But  you  must  remember 
that  this  Elevated  stock  represents  the  equity  in  a great  big 
proposition.  Here  is  $120,000,000  investment,  and  the  Ele- 
vated stock  merely  represents  the  equity.  If  the  investor 
was  absolutely  sure  that  he  would  get  5 per  cent  indefinitely 
on  a non-taxable  stock  I should  suppose  it  w^ould  sell  at  par. 
I should  suppose  so. 

Commissioner  Eastman.  If  there  should  be  such  a pro- 
vision as  that,  why  should  it  be  in  the  form  of  a rebate  in 
taxes?  Why  not  a positive  guaranty  on  the  part  of  the 
State? 

Mr.  Snow.  In  the  first  place,  if  this  burden  is  to  be  borne, 
it  ought  to  be  borne  in  communities  in  which  the  companies 
operate. 

Commissioner  Eastman.  I mean  a guaranty  by  those 
communities. 

Mr.  Snow.  Do  you  mean  by  a direct  guaranty  on  their 
part,  instead  of  a rebate  of  taxes? 

Commissioner  Eastman.  Yes. 

Mr.  Snow.  Possibly  it  is  a different  way  of  stating  the 
same  thing  in  substance,  and  I don’t  know  that  there  would 
be  any  constitutional  objection.  I don’t  know  whether  there 
would  be  to  a thing  of  that  kind  or  not.  The  State  can  do 
practically  what  it  pleases  with  taxes.  Whether  it  could 
without  the  consent  of  these  cities  and  towns  compel  it  to 
guaranty  a thing  of  this  kind,  I don’t  know.  That  is  a 
different  proposition. 

Commissioner  Eastman.  It  is  the  same  thing  in  sub- 
stance, isn’t  it? 

]\Ir.  Snow.  The  result  is  the  same.  The  result  would  be 
the  same  if  you  rebated  the  subway  rentals,  but  I doubt 
very  much  if  you  could  do  that  because  these  subway  rentals 
have  been  ])ledged  for  the  payment  of  these  bonds  under  the 
statute.  The  result  is  the  same,  but  you  may  be  able  to  do 
it  in  one  way  and  not  in  another. 

Commissioner  Eastman.  Well,  if  the  community  should 
guarantee  4|  ])er  cent,  you  could  probably  sell  it  at  par, 
couldn’t  you? 

Mr.  Snow.  That  i)roposition  is  that  a 4J  per  cent  obliga- 


1917.] 


HOUSE  — No.  1875. 


289 


tion  in  this  community,  free  of  taxes,  ought  to  sell  at  par? 
I suppose  so.  But  it  would  have  to  be  a pretty  strong 
guaranty  though. 

Commissioner  Noyes.  Are  the  bonds  of  the  West  End 
and  the  Boston  Elevated  savings  bank  investments  this  year? 

Mr.  Snow.  I think  it  is  in  January  that  they  make  that 
finding,  and  they  have  not  made  it  for  the  past  year,  but 
there  should  be  savings  bank  investments  on  last  year’s  show- 
ing, shouldn’t  there? 

Mr.  Neal.  Yes. 

Commissioner  Noyes.  Have  they  been  omitted  from  any 
such  list? 

Mr.  Snow.  Yes. 

Mr.  Neal.  For  how  many  years? 

Mr.  Snow.  Three  years.  We  have  to  get  a special  act 
covering  it. 

Commissioner  Noyes.  So  that  if  your  earnings  are  helped 
by  this  Commission  or  in  any  other  way  helped,  it  will  be 
a very  helpful  influence  on  those  bonds,  so  far  as  the  savings 
banks  are  concerned. 

Mr.  Snow.  Undoubtedly  those  are  savings  bank  invest- 
ments so  long  as  we  earn  5 per  cent. 

Commissioner  Noyes.  And  many  millions  of  those  are 
held  in  savings  banks? 

Mr.  Snow.  Yes,  a very  large  amount. 

Commissioner  Noyes.  Did  you  ever  hear  any  criticism, 
Mr.  Snow,  from  any  savings  bank  in  any  succinct  form,  of 
the  management  of  the  Elevated  Road,  or  their  salaries? 

Mr.  Snow.  No,  not  that  I know  of. 

Commissioner  Eastman.  Have  you  ever  heard  any  of  the 
directors  of  the  savings  bank  criticize  the  management  of  any 
of  the  public  service  organizations  in  which  they  are  inves- 
tors? 

Mr.  Snow.  I don’t  recall  that  I have. 

Commissioner  Noyes.  We  are  not  considering  that  now. 

The  Lieutenant-Governor.  Are  there  any  other  cpies- 
tions?  [No  response.]  Have  you  anybody  else  who  wanted 
to  be  heard  this  morning,  ]Mr.  Snow? 

Mr.  Snow.  No. 


290 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


The  Lieutenant-Goveknor.  What  is  the  pleasure  of  the 
Commission  about  coming  together  this  afternoon?  [Dis- 
cussion.] We  will  take  a recess  until  quarter  past  two,  with 
the  understanding  that  such  members  as  can  will  attend  at 
that  time. 

Commissioner  Russell.  What  is  the  i)urpose,  Mr.  Chair- 
man, may  I inquire,  of  the  hearing  or  conference  this  after- 
noon ? 

The  Lieutenant-Governor.  For  the  purpose  of  taking 
up  and  discussing  with  the  sub-committee  the  progress  of 
things. 

Commissioner'  Russell.  My  opinion  is  that  so  far  as 
possible  all  the  members  of  this  Commission  ought  to  be 
present  at  that  conference,  and  that  would  be  impossible 
unless  we  put  over  at  great  disappointment  to  the  parties 
an  important  case  which  we  started  to  hear  and  did  not  com- 
plete. We  put  over  one  matter  this  morning,  and  the  matter 
which  is  on  the  schedule  this  afternoon  has  been  put  over 
once  and  will  be  a great  disappointment  to  the  parties  in- 
volved if  there  is  a further  postponement.  I think  all  the 
members  of  our  Commission  [Public  Service  Commi.ssion] 
ought  to  be  there. 

Commissioner  Meaney.  The  sub-committee  is  not  ready 
to  report  anyway. 

[Discussion  omitted.] 

The  Lieutenant-Governor.  Then  the  meeting  will  be 
resumed  on  Monday,  at  10. 30  a.m. 

Hearing  adjourned,  the  Commission  to  reconvene  at  10.30 
A.M.,  on  Monday,  December  11,  1916. 


1917.] 


HOUSE  — No.  1875. 


291 


/ 


NINTH  DAY. 

Hearing  held  at  Room  362,  State  House,  Boston,  Mass., 
at  2 P.M.,  on  December  20,  1916. 

Sitting.  — All  members  of  the  Commission,  viz.,  the  Lieu- 
tenant-Governor, President  Wells,  Speaker  Cox,  Senators 
Bates  and  Eldridge,  Representatives  Jewett,  Newhall  and 
Lawler,  Commissioners  Alacleod,  Meaney,  Stone,  Eastman 
and  Russell  [of  the  Public  Service  Commission],  and  Com- 
missioners Swain,  Allen,  Ellis,  Quincy  and  Noyes  [of  the 
Boston  Transit  Commission]. 

Absent.  — Representative  Donovan. 

Present. — For  the  Boston  Elevated  •Railway  Company: 
Frederic  E.  Snow,  Esq.  [Gaston,  Snow  & Saltonstall),  Coun- 
sel. 

President  Wells.  I will  say  that  the  Lieutenant-Gov- 
ernor has  sent  word  that  he  will  be  late  in  getting  here  on 
account  of  the  Council  meeting,  and  he  suggests  that  we  do 
not  wait  for  him,  and  unless  there  is  objection  we  can  pro- 
ceed with  the  meeting  at  this  time. 

I understand,  Mr.  Snow,  that  you  were  to  make  a state- 
ment relative  to  the  plan  that  has  been  presented  at  this 
time. 

Mr.  Snow.  Well,  I received  a copy  of  a notification  asking 
me  to  be  present  to  discuss  it.  I am  here  for  that  purpose. 
I do  not  know  that  I am  here  for  the  purpose  of  making  a 
formal  statement  about  it.  Perhaps,  I might  say,  in  the 
first  instance,  that  I also  understood  that  the  Commission 
might  be  glad  to  have  copies  of  the  bills  that  I have  drawn 
covering  all  of  the  different  suggestions  which  we  had  made, 
and  I have  them  here  in  sets  and  a set  for  each  Commis- 
sioner. Shall  I pass  those  around  first? 

Commis.sioner  Noyes.  Yes. 

Mr.  Snow.  There  are  19  sets,  Mr.  Noyes. 

[Lieutenant-Governor  Coolidge  arrives.] 

The  Lieutenant-Governor.  Proceed. 


292 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 

Mr.  Snow.  I hoped  that  I was  going  to  answer  questions 
and  not  be  compelled  to  proceed. 

The  LiErTENANT-GovERNOR.  I have  got  to  leave  in  a few 
minutes,  because  the  Council  is  still  in  session. 

Frederic  E.  Snow,  Esq. 

I have  before  me  a report  of  the  sub-committee,  dated 
December  14,  and  I suppose  it  is  intended  that  I shall  follow 
this  and  make  any  comments  that  I have  in  regard  to  the 
report.  • ^ 

The  report  first  starts  out: 

The  committee  has  already  reported  to  the  Special  Commission  that, 
upon  the  assumption  that, the  facts  and  figures  presented  bj’  the  com- 
panj"  covered  the  case  and  were  correct. 

I understand  that  the  Commission  will  be  in  a position  to 
report  to  the  Legislature  as  to  whether  or  not  our  figures  are 
correct,  upon  their  own  investigation,  or  upon  the  investiga- 
tion that  has  been  made  by  the  Public  Service  CA)mmission 
and  is  now  being  made  of  the  last  two  years,  so  that  the  cor- 
rectness of  our  statement  of  income  and  expenditures  will  be 
verified,  and  will  be  made  through  an  investigation  by  the 
Commission. 

Plan  1 assumes  certain  elements. 

A.  That  the  financing  of  the  compain^  will  be  accomplished 
through  — 

1.  Purchase  of  the  Cambridge  subway. 

I have  drawn  a bill  which  covers  the  purchase  of  the  (Cam- 
bridge subway  by  the  State. 

2.  Return  of  the  S500,000  deposited  with  the  State. 

I have  drawn  a bill  covering  that.  That  bill  is  submitted. 

3.  Readjustment  of  existing  method  of  issuing  bonds. 

I have  not  drawn  any  bill  covering  that,  and  I as.sume 
what  is  meant  there  is  that  the  company  shall  have  au- 
thority to  issue  bonds  in  excess  of  its  capital. 


1917.] 


HOUSE  — No.  1875. 


293 


I think  the  credit  of  our  street  railway  companies  has  been 
built  up  on  the  theory  that  bonded  indebtedness  should  not 
exceed  the  capital  stock,  and  I should  very  much  doubt  the 
wisdom  of  modifying  that  rule  at  the  present  time  except  the 
bonds  issued  for  special  purposes,  such  as  rehabilitation  and 
reconstruction  purposes. 

4.  Some  charge-off  of  accrued  depreciation  against  premiums. 

In  regard  to  that  upon  further  consideration,  we  believe 
that  is  merely  a bookkeepingi  proposition,  and  I have  drawn 
two  bills  which  are  submitted  here  to  take  the  place ‘of  that 
suggestion.  In  other  words  the  mere  charge-off  of  accrued 
depreciation  against  premiums  does  not  give  us  any  more 
money.  It  is  purely  bookkeeping.  I have  drawn  two  bills, 
one  of  which  allows  the  Elevated  to  issue  special  bonds  to 
take  care  of  depreciation  or  reconstruction  of  the  property 
of  the  West  End.  It  is  drawn  along  the  lines  of  the  bill 
which  was  passed  in  l9l4,  I think  it  was,  allowing  street 
railway  companies  to  issue  special  bonds  for  that  purpose; 
and  the  Public  Service  Commis.sion  recently  has  authorized 
an  issue  of  two  and  a half  millions  of  bonds  to  the  Bay  State 
Street  Railway  for  that  purpose.  The  general  law  does  not 
permit  the  Elevated  to  issue  bonds  to  take  care  of  recon- 
struction on  the  West  End  Street  Railway,  and  therefore  I 
have  drawn  a special  bill  covering  that. 

Commissioner  Eastman.  When  you  said  the  charge-off  of 
accrued  depreciation  against  premiums  is  a mere  book- 
keeping device  and  would  not  give  you  any  more  money,  if 
you  were  enabled  during  any  given  year  to  charge  to  the 
accrued  depreciation  for  that  year  against  this  entry  appear- 
ing in  your  books,  it  would  to  that  extent  conserve  the  in- 
come of  that  year,  would  it  not? 

Mr.  Snow.  It  would  conserve  the  income  of  that  year.  It 
would  not  give  us  any  more  money,  but  relieve  us  of  the 
necessity  of  paying  for  that  dei)reciation  out  of  the  income 
for  that  year,  yes.  But  I think  the  same  object  is  accom- 
plished in  a much  better  form  in  the  second  bill  that  I drew, 
which  enables  the  Public  Service  Commission,  in  aj)proving 
an  is.sue  of  capital  stock  and  bonds,  that  we  shall  charge  off 


294 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


the  accrued  depreciation  during  a series  of  years,  and  1 think 
the  purpose  is  accomplished  much  better  in  that  way  than 
charging  off  accrued  depreciation  against  premiums.  At 
any  rate,  I have  suggested  those  two  bills  in  place  of  charg- 
ing it  off  against  premiums. 

It  then  goes  on  to  state: 

And  that  some  arrangement  will  be  devised  by  which  money  supplied 
to  the  company  can  be  loaned  by  it  to  the  West  End  in  order  to  reduce 
the  West  End’s  interest  charges,  which  are,  of  course,  borne  by  the 
company,  and  which  therefore,  in  the  long  run,  concern  the  community. 

I do  not  think  I quite  understand  that  suggestion.  Of 
course,  as  far  as  the  West  End  is  concerned,  they  are  sup- 
posed to  issue  capital  stock  or  bonds  for  all  additions  and 
improvements  to  their  own  property,  and  I suppose  that 
what  might  have  been  meant  was  this,  — that  if  the  State 
bought  the  Cambridge  subway,  we  could  get  a large  amount 
of  cash  on  hand  which  would  be  more  than  we  should  need 
for  the  pre‘sent,  and  instead  of  letting  it  lie  in  the  bank  and 
receiving  2 per  cent  or  2^  per  cent  interest,  we  should  loan  it 
to  the  West  End  and  save  that  amount  of  interest.  Is  that 
what  is  meant  by  this? 

Commissioner  Ellis.  Yes,  some  such  idea  as  that. 

Commissioner  Swain.  Wasn’t  it  contemplated  that  the 
Elevated  would  be  paid  for  the  Cambridge  subway  by  in- 
stallments as  — 

]\Ir.  Snow.  That  is  the  way  I have  drawn  my  bill,  that 
we  should  be  paid  only  in  installments,  and  our  rentals  should 
be  based  on  the  installments  actually  paid. 

Commissioner  Swain.  1 have  in  mind  that  the  dividends 
on  West  End  stock,  being  7 and  8 per  cent  higher  than  the 
Elevated  stock  — that  if  you  could  loan  money  to  the  West 
End  in  some  way  you  might  save  something. 

Mr.  Snow.  I think  the  difficulty.  Professor  Swain,  as  far 
as  the  8 ])er  cent  is  concerned,  that  applied  originally  to  the 
8(), ()()(), ()()()  of  stock  issued  in  1887.  There  has  been  no  8 
l)er  cent  stock  issued  since  that  time,  and  there  cannot  be. 

('ommissioner  Ellis.  Su})})ose  you  wanted  to  rai.se  a 
couj)le  of  million  dollars  for  something,  how  much  would  it 
cost  you? 


1917.] 


HOUSE  — No.  1875. 


295 


]\Jr.  Snow.  Well,  it  would  depend  upon  the  state  of  the 
money  market.  If  we  sold  stock  it  would  be  7 per  cent  stock 
and  we  would  get  a premium  for  it. 

Commissioner  Swain.  It  would  be  West  End  stock? 

i\Ir.  Snow.  It  would  be  West  End  stock,  and  we  could  get 
our  money  cheaper  than  by  an  issue  of  Elevated  securities, 
because  it  is  sold  at  the  market  price. 

Commissioner  Ellis.  Counting  the  dividends  on  stock 
that  you  would  issue  and  counting  the  taxes  that  you  would 
pay  the  State,  it  might  amount  to  a matter  of  7 per  cent? 

Mr.  Snow.  It  would  cost  us  less  than  it  would  cost  the 
Elevated,  because,  while  the  stock  carries  7 per  cent  net,  it 
is  sold  on  an  interest  basis,  and  it  being  a guaranteed  stock, 
it  sells  on  a better  basis  than  the  stock  of  the  Elevated. 

Commissioner  EliIis.  But  it  might  cost  you  over  6 per 
cent? 

Mr.  Snow.  It  might  cost  over  6 per  cent,  yes,  with  taxes. 

Commissioner  Ellis.  Whereas  if  you  were  permitted  to 
take  some  of  the  Cambridge  subway  money,  which  was  cost- 
ing you  4|  per  cent,  and  loan  it  to  the  West  End,  say,  at  the 
same  rate,  the  net  result  would  be  that  there  would  be  a 
saving  to  the  system  of  the  difference  between  that  per 
cent  and  6 or  GJ  per  cent,  whatever  it  may  be. 

Mr.  Snow.  That  is  true. 

Commissioner  Ellis.  And  as  the  State,  under  this  plan, 
would  have  to  guarantee  it,  to  a certain  extent,  it  would  be 
to  the  interest  of  the  State  to  save  that  per  cent  on  the 
money? 

Mr.  Snow.  That  is  true.  I had  not  thought  of  it  in  that 

light. 

Commissioner  Quincy.  Is  there  any  objection  to  financing 
the  needs  of  the  West  End  by  loans? 

Mr.  Snow.  There  is  no  objection  to  doing  it  temporarily, 
as  long  as  loan  the  money  to  tliem.  Eventually  it  woidd 
have  to  be  capitalized. 

Commissioner  Ellis.  It  would  not  make  much  difference 
at  what  rate  you  loaned  it  to  the  West  End? 

Mr.  Snow.  No. 

Commissioner  Ellis.  If  you  loaned  it  at  G or  7 per  cent. 


296 


BOSTON  ELEA^ATED  RAILWAY. 


[Mar. 


the  Elevated  would  have  the  difference  in  that  percentage 
and  the  community  would  be  saved  so  much,  assuming  that 
the  community  has  got  to  assume  the  difference  between  the 
4^  per  cent  which  it  would  cost  j^ou  on  the  Cambridge  sub- 
way, and  the  6 per  cent  and  upwards  that  it  would  cost  you? 

Mr.  Snow.  That  is  true,  to  the  extent  that  we  might  have 
money  from  the  proceeds  of  the  Cambridge  subway.  It  had 
not  occurred  to  me  in  that  light. 

Commissioner  Eastman.  I think,  Mr.  Snow,  that  sugges- 
tion sprang  from  your  statement  in  regard  to  the  West  End 
bonds  the  last  time  you  appeared  before  the  Commission, 
where  you  spoke  of  the  ^2,700,000  bonds? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  At  an  additional  cost  of  at  least 
1 per  cent  a year  to  the  company? 

Mr.  Snow.  Yes.  I had  not  thought  of  it  from  that  stand- 
point, and  that  is  undoubtedly  true,  as  far  as  we  get  per 
cent  on  the  money  from  the  State,  and  we  can  loan  it  tem- 
porarily to  the  West  End,  and  it  will  save  some  interest 
charges.  That  is  undoubtedly  true.  We  would  either  have 
to  capitalize  it  in  West  End  securities,  or  issue  new  capital  of 
the  Elevated,  and  we  can  get  money  cheaper  through  issuing 
West  End  securities  than  through  issuing  Elevated  securities. 

Commissioner  Swain.  That  would  be  only  temporary. 

Mr.  Snow.  It  would  only  be  temporary. 

Commissioner  Ellis.  At  the  same  time,  if  it  is  tljree  mil- 
lion dollars,  and  you  save  IJ  per  cent  for  a dozen  years,  that 
is  S45,000  a year. 

Commissioner  Eastman.  Isn’t  it  true  that  in  1922,  the 
West  End  becomes  the  Elevated,  and  if  you  should  loan  this 
money  u])  to  1922,  at  that  time  the  situation  will  be  cleared? 

Mr.  Snow.  Let  me  see.  Yes,  it  woidd,  if  we  had  enough 
money  to  carry  us  until  1922. 

Commissioner  Allkn.  Eor  five  years,  and  then  it  will  be 
])timai:ently  saved? 

Mr.  Snow.  Yes,  because  we  would  owe  it  to  ourselves;  • 
but  in  so  far  as  we  loan  it  to  the  West  End,  it  takes  the 
place  of  otlier  ca])ital  tliat  the  Elevated  may  have  to  raise, 
unless  you  assume  tluit  the  money  from  tlie  Cambridge  sub- 


1917.] 


HOUSE  — Xo,  1875. 


297 


way  is  all  that  we  need  until  1922.  Of  course,  you  under- 
stand, in  getting  West  End  capital,  \ve  generally  get  50  per 
cent  in  bonds  and  50  per  cent  in  stock,  so  that  the  saving 
would  not  be  quite  as  large  as  it  would  be  if  it  was  all  stock. 

Commissioner  Ellis.  I appreciate  that.  This  would  cost 
on  the  basis  of  half  stock  and  half  bonds,  which  must  cost 
you  upwards  of  6 per  cent? 

Hr.  Snow.  You  mean  on  the  average  now? 

Commissioner  Ellis.  Yes. 

]\lr.  Snow.  Probably  at  the  present  time  it  would, 
although  it  has  been  done  very  much  cheaper  in  the  past. 

Commissioner  X^oyes.  Why  would  it  cost  more  now? 

iMr.  Snow.  Because  West  End  common  stock  is  selling 
well  below  60,  and  it  sold  as  high  as  70  or  80. 

Commissioner  XYyes.  It  is  selling  at  a premium. 

Mr.  Snow.  It  is  selling  at  a premium,  but  our  West  End 
stock,  — I don’t  know  how  high  it  has  been  sold,  but  in  our 
issues  of  West  End  stock  we  got  for  it  certainly  60  or  70,  and 
I should  say  substantially  higher  than  that  at  times,  so  that 
our  money  that  we  raised  from  the  sale  of  West  End  stocks, 
as  far  as  our  dividends  are  concerned,  probably  has  not  cost 
us  more  than  4^  per  cent,  if  it  is  that. 

Commissioner  Quincy.  How  do  you  account  for  the  com- 
paratively low  price  of  the  West  End  stock? 

Mr.  Snow..  I think  there  are  two  causes.  One  is  the 
uncertainty  as  to  the  financial  situation  of  the  Elevated,  and 
then  everybody  expects  a very  much  higher  rate  of  interest 
now  than  they  did  years  ago.  In  other  words,  bonds  that 
could  have  been  sold  on  a 4 per  cent  basis  three  or  four 
years  ago  cannot  be  sold  on  a 5 per  cent  basis  now.  It  is 
not  a question  of  the  strength  of  the  securities,  but  simply 
people  want  more  for  their  money. 

Commissioner  N^oyes.  How  about  these  last  bonds? 

Mr.  Snow.  I do  not  think  they  have  approved  them  yet. 
Have  they? 

Commissioner  Eastman.  West  End  bonds? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  I do  not  think  so.  You  say 
West  End  common  sold  as  low  as  60? 


298 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Snow.  I think  as  low  as  56. 

Commissioner  Eastman.  Would  that  be  on  a 6 per  cent 
basis? 

Mr.  Snow.  Yes,  it  is  now.  That,  as  I say,  we  have 
sold  — well,  I would  not  say  what  the  highest  price  is.  It 
is  shown,  I think,  in  our  statement  here. 

The  report  goes  on: 

That  relief  will  probably  be  given  by  the  Commission  in  the  matter 
of  enclosed  areas  and  possibly  in  the  matter  of  8-cent  checks,  and 

C.  That  some  measure  of  relief  will  probably  be  secured  by  increas- 
ing efficienc}^  and  economy  in  operation  and  administration  by  the 
company. 

I should  say  that  if  that  was  not  so  they  ought  to  have  a 
different  management.  In  other  words,  every  management, 
of  course,  ought  to  expect,  as  they  go  along,  to  constantly 
improve.  How  that  will  result  financially  must  depend  upon 
the  increase  in  wages  and  the  increased  cost  of  material  and 
supplies. 

Plan  1,  in  substance,  as  follows: 

A.  That  certain  taxes  and  charges  should  be  remitted:  — 

1.  Compensation  tax.  The  compensation  tax  is  seven-eighths  of  1 
per  cent. 

2.  Corporate  franchise  tax. 

Those  two,  I understand,  are  suggestions  which  we  made. 

At  present  neither  of  these  taxes  is  retained  by  the  Commonwealth. 

The  Commonwealth  retiiins  a small  part. 

Commissioner  Ellis.  Eor  administration. 

Senator  Bates.  S8,000. 

Mr.  Snow.  It  retiiins  a small  i)art,  because  part  of  our 
location  is  in  the  metropolitan  district,  and  that  part  of  it 
goes  to  the  State. 

If  the  existing  law  re(iuiring  the  company  to  do  certain  paving  is 
changed,  the  amount  of  taxes,  if  any  required  to  be  remitted,  would 
thereby  be  reduced  ))y  a sum  estimated  to  be  alx)Ut  $o6t),392  for  the 
three  year  i)eriod  beginning  July  1,  191  (>. 


1917.] 


HOUSE  — Xo.  1875. 


299 


I think  there  is  some  misapprehensioji  in  regard  to  those 
figures.  The  $566,000  does  not  represent  the  mere  cost  of 
the  paving  itself.  It  represents,  in  addition,  the  cost  of  the 
changes  in  the  track  made  necessary  by  the  repaving.  I 
should  doubt  whether  the  State  or  the  municipalities  would 
be  willing  to  pay,  not  only  for  the  cost  of  the  repaving,  but 
also  for  the  necessary  changes  in  our  track.  So,  I do  not 
think  that  you  could  calculate  anything  like  $566,000  that 
could  be  saved.  In  other  words,  they  might  assume  the  cost 
of  the  repaving,  but  they  certainly  would  not  expect  to 
assume  the  cost  of  the  repaving  caused  by  the  change  of 
track,  which  is  a substantial  item. 

Commissioner  Eastman.  Do  you  mean  by  that  the  laying 
of  new  track? 

Mr.  Snow.  Xo,  I do  not  mean  the  cost  of  laying  jiew 
track,  but  every  time  the  paving  is  done  over  there  are  all 
sorts  of  changes  required  in  the  track,  to  adjust  themselves 
in  the  paving,  and  the  cost  of  that  is  a substantial  part  of 
the  $566,000.  Isn’t  that  shown  in  our  exhibit? 

Senator  Bates.  Exhibit  R. 

Mr.  Snow.  For  instance,  take  Exliibit  R,  “cost  of  work 
in  Boston  Elevated  Railway  Company’s  tracks  made  neces- 
sary  by  the  proposed  repaving  of  streets”  in  the  city  of 
Boston.  If  you  take  the  first  item  you  will  find  that  the 
paving  cost  is  $5,698;  cost  of  ballast  to  support  track, 
$1,160;  cost  of  track  work  made  necessary  on  account  of 
repaving,  which  may  be  charged  to  repaving,  $10,708;  so 
that  out  of  a total  cost  on  that  particular  street  of  $17,000, 
$10,000  represents  the  cost  of  the  track  work  and  not  the 
cost  of  the  paving  itself. 

Commissioner  Stone.  Isn’t  that  maintenance,  Mr.  Snow? 

Mr.  Snow.  That  is  a statement  here  made  by  Mr.  Stewart. 

Commissioner  Eastman.  Doesn’t  that  mean,  Mr.  Snow, 
because  the  paving  is  to  be  opened  up  at  that  time,  that  you 
do  your  work  on  your  track,  and  if  it  was  not  repaved  you 
would  postpone  it  to  a somewhat  later  date? 

Mr.  Snow.  That  undoubtedly  represents  a substantial 
part  of  it,  although  not  the  whole;  but  it  is  undoubtedly 
true  that  when  they  put  in  permanent  ])aving  it  is  economy 


300 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


to  rebuild  the  track  at  that  time,  instead  of  waiting  for  four 
or  five  years.  But  that  does  not  represent  the  whole  of  it. 
But,  as  you  will  see,  out  of  the  estimated  amount  in  Boston 
of  $102,000,  $50,000  of  that  is  track  work,  and  the  balance 
is  the  cost  of  the  paving  itself. 

Commissioner  Macleod.  In  this  connection,  I may  say 
that  I received  from  Mr.  Neal  a memorandum  of  some  detail 
in  regard  to  the  expense  of  maintaining  paving  for  the  fiscal 
years  of  1914,  1915  and  1916;  and  apparently  from  this 
exliibit,  which  I think  ought  to  be  filed  in  this  case,  in  the 
1914  figures  there  is  a total  sum  of  $106,174  which  represents 
the  expenditures  on  paving  compelled  by  the  municipality. 
Of  the  total  amount,  the  cost  of  the  paving  proper  was 
apparently  only  $26,000,  and  the  rest  of  the  sum  represents 
rails,  ties,  track  labor,  and  miscellaneous,  and  it  is  about 
the  same  proportion  in  other  years.  I think,  Mr.  Noyes, 
this  had  better  be  filed  with  you. 

[Commissioner  Macleod  hands  paper  to  Commissioner 
Noyes.] 

Commissioner  Noyes.  Is  this  from  the  auditor? 

Commissioner  Macleod.  Yes.  You  might  make  a mem- 
orandum on  that,  “Submitted  by  the  auditor  of  the  Boston 
Elevated.” 

Representative  Newhall.  Mr.  Chairman,  in  connection 
with  this  repaving  proposition,  on  page  35  of  your  report 
why  do  you  say  $566,000,  that  referring  to  the  balance  of 
1916  and  1917;  and  if  I understood  you  correctly,  you  say 
$566,000  for  three  years  in  your  remarks  a few  minutes  ago. 

Mr.  Snow.  Yes. 

Representative  Newhall.  Why  does  your  report  say  for 
the  balance  of  1916  and  during  the  calendar  year  1917 
$566,392?  Then,  at  the  bottom  of  that  s«ame  section,  it  says; 

The  above  figures  include  the  cost  of  such  work  only  as  is  made 
necessary  by  the  repaving  of  the  streets.  They  do  not  include  the  cost 
of  paving  made  necessary  by  changes  in  or  repairs  or  extensions  of  the 
company’s  track. 

I just  want  to  get  that  clear  in  my  mind,  for  I do  not  find 
any  bill  in  your  briefs  submitted  to  us  in  regard  to  this 
repaving. 


1917.] 


HOUSE  — No.  1875. 


301 


Mr.  Snow.  No,  I have  not  submitted  any  bill. 

Representative  Newhall.  I followed  that  legislation  very 
closely  last  year,  and  I found  out  just  how  certain  bills  were 
defeated  in  the  Legislature.  I understand  from  everything 
that  I have  taken  from  what  has  been  said  here  that  the 
extra  expense  of  the  relief  that  is  required  by  the  Boston 
Elevated  has  been  caused  by  its  rapid  transit  service.  Now, 
on  the#elevated  lines,  so  far  as  we  refer  to  the  rapid  transit 
service  is  one  thing.  I cannot  conceive  why  the  surface 
lines  of  the  Elevated  should  be  treated  any  different  from 
the  surface  lines  of  any  other  street  railway  company,  and 
I would  like  to  get  clear  in  my  mind  why  the  Boston  Ele- 
vated Company  should  pay  for  the  repaving  of  streets  in 
Boston,  and  other  towns  and  cities  in  the  Commonwealth  do 
not  pay  for  that,  and  why  that  should  not  be  a question  of 
legislation. 

Mr.  Snow.  Well,  that  happened  in  this  way:  that  by  the 
public  statutes  in  1882  all  street  railway  companies  were 
required  to  maintain  the  paving  between  their  rails  and  for  a 
certain  distajice  outside  where  the  streets  were  paved.  That 
continued.  In  1897  the  Elevated  was  chartered,  and  it  was 
provided  in  the  charter  that  they  should  pay  a special  com- 
pensation tax  of  seven-eighths  of  1 per  cent  of  their  earnings 
for  the  privilege  of  using  their  streets.  They  still  continued 
to  pay  for  the  paving  between  the  rails,  and  all  other  street 
railway  companies  subsequently  — I think  it  was  in  1898;  I 
am  not  quite  sure  of  the  year  — the  law  was  changed  in 
regard  to  all  other  street  railway  companies,  and  all  other 
street  railway  companies  were  compelled  to  pay  a special  tax 
which  was  paid  over  to  the  cities  and  towns,  and  the  cities 
and  towns  were  to  use  that  money  to  do  all  the  repairing 
and  removing  the  snow,  and  the  other  street  railway  com- 
panies were  relieved  from  the  obligation  which  had  thereto- 
foVe  existed  to  do  paving,  because  they  ])aid  this  s])ecial  tax; 
but  that  special  tax  was  paid  only  by  other  street  railway 
companies,  so  it  left  the  Elevated,  under  its  existing  obliga- 
tions, to  do  the  paving,  which  they  have  always  had  to  do 
up  to  the  present  time. 

Representative  Newiiall.  Do  you  remember  the  hearing 


302 


BOSTON  elp:vated  railway. 


[Mar. 


that  was  had  before  the  Public  Service  Commission,  and 
their  report  filed  on  this  subject  last  year? 

Mr.  Snow.  Yes. 

Representative  Newhall.  And  do  you  remember  Mr. 
Eastman  asking  this  question,  which  appears  on  page  14  of 
their  report: 

Supposing  the  city  reaches  a conclusion  that  a certain  street  ought 
to  be  repaved  with  a new  and  desirable  kind  of  pavement,  is  rtiere  any 
way  by  which  the  city  has  authority  over  the  company  to  require  the 
company  to  join  in  the  cost  of  the  improvement  for  the  street? 

Mr.  Sullivan.  None  that  T know  of.  I do  not  say  in  all  cases  that 
the  Elevated  refuses  to  join.  I think  it  has  in  some  cases,  but  it  is 
simply  l)y  their  consent.  I do  not  suppose  we  could  require  them  to 
do  it. 

Mr.  Snow.  Yes. 

Representative  Newhall.  Last  year,  on  the  face  of  this 
report,  which  is  1950  of  last  year,  and  also  in  the  face  of  a 
certain  bill  from  the  Board  of  Trade  of  Cambridge,  the 
Boston  Elevated,  after  that  bill  was  filed,  or  an  amendment 
or  a new  bill,  which  I think  was  2132  of  the  Cambridge 
Board  of  Trade  bill,  — the  Boston  Elevated  entered  into  an 
agreement  with  the  city  of  Cambridge  and  the  city  of  Bos- 
ton, and  I suppose  with  other  municipalities  in  which  you 
have  tracks,  — entered  into  an  agreement  that  if  that  bill 
was  defeated  you  would  continue  to  do  what  you  had  done 
prior  to  four  years  before  that. 

Mr.  Snow.  Yes. 

Rejiresentative  Newhall.  iMr.  Gordon  recalled  that  bill, 
])erhaps  you  may  remember,  from  the  Governor,  and  chajiter 
302  was  passed,  and  it  said  in  section  4,  “This  shall  not 
ai)])ly  to  any  street  railway  companies  that  pay  a francliise 
tax,”  including  the  Elevated,  of  course.  Now,  what  is  tlie 
result?  All  the  street  railway  companies  say,  “We  are  not 
recpiired  to  do  this  work  that  we  did  prior  to  this  time.” 
And  that  is  the  way  you  left  the  cities  and  towns  by  your 
agreement  that  you  entered  into  with  the  city  of  Boston  and 
the  city  of  Cambridge,  by  defeating  that  bill  in  the  closing 
days  of  the  Legislature. 

Now,  1 cannot  conceive  of  tbe  surface  lines  in  the  city  of 


1917.] 


HOUSE  — No.  1875. 


303 


Boston  of  the  Elevated  paying  for  repaving.  If  it  is  right  for 
the  Elevated  to  pay  for  repaving  in  the  city  of  Boston,  it  is 
right  for  the  Bay  State  Street  Railway  Company  to  pay  for 
repaving  in  the  local  cities  and  towns  where  they  serve.  I 
realize  that  your  franchise,  or  your  agreement  that  you  refer 
to,  is  one  story,  but  for  three  or  four  years,  on  your  own 
statement,  you  refused  to  do  that.  Now,  there  is  no  legal 
obligation.  You  say  so  in  your  statement  the  other  day; 
Mr.  Sullivan  says  so  for  the  city  of  Boston  in  this  report,  and 
I cannot  say  whether  that  is  $566,000  or  whether  it  is 
$200,000,  but  I am  willing  to  take  it  and  say  $300,000, 'that 
the  Boston  Elevated  Railway  would  save  if  you  did  not  have 
to  build  these  new  streets,  or  this  new  surfacing  material, 
whatever  it  may  be,  and  it  seems  to  me  that  that  is  a ques- 
tion that  should  enter  into  some  of  your  bills. 

Mr.  Snow.  Our  situation  last  year  was  this:  that  the 
Public  Service  Commission  had  reported  a new  bill  in  regard 
to  paving.  We  understood,  and  it  was  a fact,  that  most  of 
the  other  outside  street  railways  were  in  favor  of  it.  That 
bill  applied  to  the  Elevated  road.  We  believed  that  bill,  if 
it  became  a law,  would  cost  us  a large  amount  of  money. 

Representative  Newhall.  Do  you  know  how  far  that 
report  of  the  Public  Service  Commission  ever  got  in  the 
Legislature? 

Mr.  Snow.  1 don’t  think  it  ever  got  out  of  the  committee. 

Representative  Newhall.  In  that  relation,  the  same  ques- 
tion was  on  the  Cambridge  Board  of  Trade  bill,  and  you 
know  that  the  Cambridge  Board  of  Trade  bill  came  out  of 
the  committee  with  a unanimous  report,  and  you  know  it 
passed  the  House,  and  you  know  it  passed  the  Senate,  and 
you  know  it  went  into  the  Governor’s  hands. 

Mr.  Snow.  I know  it,  if  you  .say  so. 

Representative  Newhall.  Well,  the  records  will  show. 

i\Ir.  Snow.  I am  not  questioning  the  fact  that  that  is  so, 
but  I am  very  sure  that  the  agreement  that  we  made  with 
the  city  of  Boston  was  made  before  any  report  had  been 
made  by  the  committee,  and  that  that  Cambridge  bill 
which  you  speak  of  came  out  of  committee  after  we  had 
made  our  agreement  with  the  city  of  Boston. 


304 


BOSTON  ELEVATED  BAILWAY. 


[Mar. 


Representative  Newhall.  Then  why  do  you  speak  of  the 
city  of  Cambridge? 

Mr.  Snow.  Simply  in  this  way:  that  of  course  our  obliga- 
tion in  regard  to  paving,  as  a practical  matter,  has  got  to  be 
the  same  in  every  city  and  town  where  we  operate.  We 
made  a formal  agreement  with  the  city  of  Boston.  I do  not 
think  we  made  a formal  agreement  with  the  city  of  Cam- 
bridge, but  I think  we  informally  told  them  out  there  in 
Cambridge,  and  I think  we  told  the  other  cities  and  towns  in 
which  we  operate,  that  we  should  continue  to  do  the  same 
thing  with  them  that  we  did  with  the  city  of  Boston.  In 
other  words,  we  could  not  distinguish  between  what  we  did 
in  Boston  and  what  we  did,  for  instance,  in  Medford  or 
Cambridge. 

Representative  Newhall.  As  a question  of  law,  you 
would  not  be  compelled  to  do  this? 

Mr.  Snow.  In  my  judgment,  no. 

Representative  Newhall.  And  in  Mr.  Sullivan’s  judg- 
ment? 

Mr.  Snow.  Yes.  But  we  made  this  agreement  because  we 
feared  we  would  be  subjected  to  a very  much  greater  expense 
if  we  did  not  do  it.  Now,  it  may  have  been  a matter  of  bad 
judgment,  but  at  that  time  we  made  a trade. 

Commissioner  Eastman.  Is  that  a contract  with  the  city 
of  Boston? 

Mr.  Snow.  I think  it  is  in  the  form  of  a letter,  Mr. 
Eastman. 

Commissioner  Eastman.  Is  it  anything  that  is  enforcible 
in  the  court?  Is  it  a unilateral  agreement? 

Mr.  Snow.  I sujipose  it  is  a unilateral  agreement.  I 
suj)pose  it  is;  but  I do  not  think  v/e  should  be  in  the  j)osi- 
tion  to  care  to  defend  it  on  the  ground  that  we  were  not 
bound. 

Rc})resentative  Newhall.  But  you  say,  Mr.  Snow,  that 
your  judgment  is  that  there  is  no  real  law  that  you  would 
be  obliged  to  do  this  exccj)t  an  agreement? 

Mr.  Snow.  ^'es. 

Re])resentative  Newhall.  And  Mr.  Sullivan,  in  Ids  state- 
ment to  the  Public  Service  (’ommission,  I think,  as  shown  in 


1917.]' 


HOUSE  — No.  1875. 


305 


your  report  — it  is  placed  in  your  report,  and  I suppose  it 
must  have  been  of  some  importance  or  you  would  not  have 
quoted  his  exact  words  — he  says  that  he  knows  of  no  way 
that  the  city  of  Boston  could  have  enforced  it. 

Mr.  Snow.  I so  understood  him  to  say. 

Representative  Newhall.  This  question  of  paving  has 
been  bothering  me  since  the  last  hearing,  and  I cannot  con- 
ceive the  Boston  Elevated,  because  they  entered  into  an 
agreement  with  the  city  of  Boston  to  do  a certain  thing, 
which  for  three  or  four  years  you  have  not  done,  and  you 
did  not  do  it  in  Cambridge  — 

Mr.  Snow.  -We  used  to  do  it. 

Representative  Newhall.  Sure.  All  these  companies, 
including  the  Bay  State  Street  Railway  Company,  have  done 
it  for  years;  but  on  the  passage  of  chapter  302,  and  with  the 
sanction,  as  I understand  it,  of  the  Public  Service  Commis- 
sion, I understand  they  are  refusing  to  do  it  to-day,  and  they 
are  refusing  to  do  it  in  all  the  municipalities. 

Mr.  Snow.  That  I could  not  tell  you.  I don’t  know 
about  all  the  other  street  railway  companies. 

Representative  Newhiall.  I know.  The  point  of  chapter 
302,  which  is  a bill,  as  I understood  from  your  statement  — 
the  bill  and  your  agreement  with  the  city  of  Boston  — the 
bill  which  was  killed  — it  was  not  killed,  but  an  amendment 
was  placed  in  that  bill  — 

Mr.  Snow.  I should  not  agree  to  that.  What  we  were 
afraij  of  was  a bill  along  the  lines  of  the  report  of  the  Public 
Service  Commission. 

Representative  Newhall.  You  must  have  known,  Mr. 
Snow,  that  this  original  bill  from  the  Cambridge  Board  of 
Trade  was  in  the  Legislature,  which  was  No.  1299.  You 
must  have  known  that  1299,  which  affected  your  road,  was 
in  the  I^egislature,  and  you  must  have  known  that  2132 
came  out  of  the  committee,  and  went  through  the  House 
and  went  through  the  Senate. 

Mr.  Snow.  Well,  as  I say,  our  arrangement  with  the  city 
of  Boston,  I am  sure,  was  made  before  anything  came  out  of 
the  committee.  We  did  not  know  what  the  committee  was 
going  to  do.  That  I can  ascertain  for  you,  because  I can 
ascertain  the  date  of  our  agreement. 


30G 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Representative  Newhall.  You  knew  it  was  recalled  from 
the  Governor? 

Mr.  Snow'.  That  was  afterw^ard.  We  made  our  agree- 
ment before  that. 

Representative  New^hall.  You  made  it  on  the  report  of 
the  Public  Service  Commission  alone. 

Mr.  SNOW^  We  made  it  before  the  street  raihvay  com- 
mittee, or  W'hoever  had  it,  had  come  to  any  conclusion  as  to 
W'hat  they  w^ere  going  to  do,  and  wEat  we  Were  afraid  of  w^as 
that  the  committee  would  report  a bill  along  the  lines  of  the 
report  of  the  Public  Service  Commission. 

Representative  New'hall.  Well,  they  reported  a bill  a 
good  deal  w orse. 

Mr.  Snow'.  All  right,  but  it  did  not  apply  to  us. 

Representative  New'hall.  It  absolutely  applied  to  you. 
You  pay  a franchise  tax,  do  you  not? 

Mr.  Snow\  Yes,  but  w^e  pay  that  under  the  Act  of  1897. 

Representative  New'HALL.  Certainly.  I am  not  disputing 
that,  but  this  section  4 which  W'as  placed  in  this  bill,  wdiich 
W'as  passed  in  chapter  302,  simply  puts  into  section  4,  ^‘This 
shall  not  apply  to  street  railw’ays  paying  a franchise  tax.” 

Commissioner  Macleod.  You  will  find  that  the  Street 
Raihvay  Company  is  paying  a commutation  tax. 

Mr.  Snow\  Of  course,  you  understand  that  the  original 
report  contemplated  that  this  law'  should  apply  to  the  Ele- 
vated, just  the  same  as  any  other  street  railway  company. 
That  is  what  we  were  afraid  of.  ^ 

Rei)resentative  New'hall.  And  so  did  the  Cambridge 
Board  of  Trade  bill. 

Mr.  Snow'.  That  w'as  later. 

Representative  New'Hall.  Both  bills  were  in  the  com- 
mittee. 

Mr.  Snow'.  All  right,  but  they  w'ere  not  reported  by  the 
committee  until  later. 

Re])resentative  Newhall.  The  bill  of  the  Cambridge 
I^oard  of  Trade  was  1299;  the  report  of  the  Public  Service 
(k)mmission  was  — it  must  have  been  i)rinted  three  or  four 
weeks  ])rior  to  that. 

Mr.  Snow'.  What  we  were  afraid  of  was  the  report  of  the 
Public  Service  Commission. 


1917.] 


HOUSE  — No.  1875. 


307 


Representative  Newhall.  If  you  read  it  you  were  more 
afraid  of  the  other  bill. 

Mr.  Snow\  I know  I read  them  at  the  time,  and  what- 
ever we  did  we  did  from  a purely  selfish  motive,  thinking 
that  W'e  were  going  to  save  money  for  the  company. 

Representative  Newhall.  I am  not  blaming  the  Boston 
Elevated  for  doing  it,  but  I am  blaming  the  various  cities 
and  towns  for  allowing  you  to  put  across  something  at  the 
very  last  moment. 

Mr.  Snowl  I don't  think  we  had  anything  to  do  with  it. 

Commissioner  Macleod.  This  law  is  not  a matter  which 
would,  on  its  face,  indicate  any  activity  on  the  part  of  the 
Boston  Elevated,  because  they  still  remain  subject  to  the  ' 
provisions  of  the  bill.  The  exemption  was  in  the  case  of  the 
other  companies  that  paid  the  commutation  tax. 

Mr.  Snow.  As  I remember  the  bill,  as  it  came  out,  I 
advised  the  road  that  it  was  unconstitutional,  as  it  at- 
tempted to  apply  to  us,  because  it  left  us  as  the  only  com- 
pany subject  to  it;  that  it  did  not  apply  to  any  other  street 
railway,  because  it  applied  to  some  special  tax,  and  according 
to  our  charter  it  was  unconstitutional. 

Representative  Newhall.  As  I remember  it,  it  applied 
to  no  street  railway  company;  it  was  simply  a waste  of 
printers’  ink. 

Mr.  Snowl  Yes,  that  was  the  final  result. 

Commissioner  Eastman.  It  may  be  of  interest  to  state 
that  the  Electric  Railway  Journal  quoted  Mr.  Lyons  of  the 
Boston  Elevated  Railway  as  stating  that  his  company  killed 
the  bill  recommended  by  the  Public  Service  Commission. 

Mr.  Snow.  I hope  I shall  not  be  held  responsible  for 
every  statement  in  the  Electric  Railway  Journal.  I think, 
Mr.  Eastman,  it  made  a lot  of  difference  whether  the  city  of 
Boston  was  pushing  for  it  or  not. 

Representative  Newtiall.  Mr.  Snow,  I would  like  to  ask 
you  what  is  the  difference  between  excise  tax  and  commuta- 
tion tax? 

Mr.  Snow.  I do  not  know. 

Commissioner  Macleod.  They  are  the  same  tax.  I have 
forgotten  which  term  is  used  in  the  statute. 


308 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commissioner  Eastman.  Commutation. 

Commissioner  Macleod.  In  towns  they  are  commonly 
spoken  of  as  excise  tax.  It  is  the  same  tax. 

Representative  Newhall.  I would  like  to  inquire  if  this 
section  4 of  chapter  302  did  not  have  some  effect  on  the 
Boston  Elevated? 

Commissioner  Macleod.  If  the  bill  is  constitutional  it 
would  apply  to  the  Boston  Elevated  Railway  only. 

Representative  Newhall.  Only? 

Commissioner  Macleod.  Only.  That  is  to  say,  the 
theory  w^as  that  other  towns  are  already  paid  for  doing  this 
work  through  the  commutation  tax.  The  Boston  Elevated 
is  not  in  that  same  po3ition.  There  is  a difference  in  the  case 
of  the  Boston  Elevated.  In  the  cases  of  the  other  companies 
they  are  paying  this  tax  in  lieu  of  doing  the  work.  The 
compensation  tax  is  one  of  the  incidents  attaching  to  this 
special  legislation.  I do  not  know  all  the  motives  that 
entered  into  it,  but  I think  it  is  officially  described  as  a tax 
for  the  use  of  the  streets. 

Commissioner  Eastman.  Mr.  Snow^  isn’t  that  compensa- 
tion tax  described  by  Mr.  Pillsbury  as  one  of  the  considera- 
tions for  the  contract  in  section  10? 

Mr.  Snow.  That  I could  not  tell  you. 

Commissioner  Eastman.  It  is  provided  for  in  section  10. 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  It  says  they  shall  pay  so  much 
“for  the  privileges  herein  granted?” 

Mr.  SnoW'.  Yes. 

Commissioner  Macleod.  It  was  part  of  the  deal? 

^Ir.  Snowl  It  w’as  part  of  the  arrangement. 

Commissioner  Macleod.  It  was  not  intended,  in  any 
sense,  to  represent  an  equivalent  for  the  commutation  tax 
])aid  by  other  com])anies  on  a diff'erent  basis.  . 

Mr.  Snowl  It  was  not  at  that  time,  certainly,  although  we 
claimed  that  w hen  this  commutation  tax  w as  imposed  on  the 
other  companies,  we  wxre  already  paying  this  tax  of  seven- 
eighths  of  1 per  cent,  and  oughi  not  to  be  compelled  to  pay 
the  commutation  tax,  although  at  the  time  the  seven-eighths 
of  1 per  cent  tax  was  not  intended  as  a substitute  for  the 
paving. 


1917.] 


HOUSE  — No.  1875. 


309 


Representative  Newhall.  At  the  time  that  was  imposed, 
what  amount  was  received  the  following  year  after  the  law 
became  operative? 

Mr.  Snow.  I could  not  tell  you.  I can  give  you  those 
figures,  but  I cannot  tell  you  from  recollection. 

Representative  Newhall.  What  is  the  revenue  to-day 
from  that  source? 

Mr.  Snow.  My  recollection  is  that  it  is  $156,000,  or  some- 
thing like  that,  isn’t  it?  It  is  stated  here,  what  it  was  last 
year,  — $152,000.  It  is  on  page  78. 

Commissioner  Meaney.  It  is  on  page  2 in  this  report. 

Mr.  Snow.  Yes. 

Commissioner  Macleod.  Mr.  Snow,  it  is  safe  to  assume, 
from  the  way  this  matter  has  been  dealt  with  by  you  at  this 
time  and  at  previous  hearings,  that  the  attitude  of  the  com- 
pany is  that  any  possible  relief  from  this  source  would  not  be 
large  enough  to  compensate  for  the  disturbance  that  would 
be  caused  by  any  atteinpt  to  modify  the  agreement  that  was 
entered  into  with  the  cities? 

Mr.  Snow.  Well,  I don’t  think  that  the  amount  which 
would  be  saved  would  be  relatively  large,  but  whether  it 
would  be  large  or  not,  having  made  this  agreement  with  the 
city  only  less  than  a year,  we  do  not  feel  it  would  be  good 
faith  on  our  part  to  ask  to  have  legislation  annulling  it. 

Commissioner  Macleod.  Have  you  any  suggestion  to 
make  to  this  Commission  in  regard  to  it?  Do  you  think, 
viewing  it  from  the  standpoint  of  this  Commission,  and 
looking  at  the  matter  broadly,  whether  the  amount  that  is 
likely  to  be  saved  by  the  company  would  make  it  worth 
while  to  disrupt  the  agreement  that  has  been  entered  into? 
If  I read  those  figures  presented  there  by  Mr.  Neal,  correctly, 
it  was  $26,000  in  1914,  about  $9,000  in  1915,  and  some  other 
small  amount  for  the  following  year.  If  that  is  all  that  is 
involved  in  it,  it  is  hardly  worth  spending  as  much  time  as 
we  have  already  spent  in  the  discussion  of  it. 

Mr.  Snow.  I should  say  that  for  the  next  few  years  at 
least  that  amount  would  be  charged.  Our  estimate  for  the 
next  three  years  is  something  over  $300,000,  for  the  cost  of 
the  paving  itself,  which  would  be  at  the  rate  of  about 
$100,000  a year. 


310 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commissioner  Macleod.  Might  not  the  retention  of  the 
existing  situation  be  as  valuable  to  the  company  as  repre- 
senting some  sort  of  offset  that  the  company  was  giving  to 
these  towns?  Would  your  argument  on  that  basis  be  w^orth 
as  much  as  any  financial  relief  in  this  respect? 

Mr.  Snow.  I should  think  it  might. 

Commissioner  Macleod.  I should  think,  if  that  situation 
exists,  it  might  represent  some  sort  of  compensation  by  the 
company  in  the  form  of  rendering  service  outside  of  what 
they  are  obliged  to  render  to  the  various  cities  and  towns 
which  would  be  affected  by  any  remission  of  taxes. 

Mr.  Snow.  Yes. 

Representative  Newhall.  You  say  that  $100,000  a year 
for  the  next  three  years  would  be  the  saving. 

Mr.  Snow.  As  I read  these  figures,  the  total  cost  to 
which  we  expect  to  be  put  is  $566,000.  Of  that,  however, 
$235,000  represents  the  cost  of  changes  in  our  track  made 
necessary,  so  that  deducting  that  from  $566,000  would  leave 
the  amount  of  the  cost  of  the  paving  as  such,  as  distin- 
guished from  the  cost  of  our  track  work. 

Commissioner  Macleod.  That  would  represent  about 
$100,000  a year? 

Mr.  Snow.  About  ($100,000  a year  for  three  years. 

Representative  Newiiall.  Mr.  Snow,  haven’t  you  made  a 
statement  before  this  Commission  before  that  that  would 
represent  $200,000  a year  or  better? 

Mr.  Snow.  Yes,  because  I have  said  that  this  additional 
repaving  of  the  streets  would  cost  us  $566,000,  according  to 
our  estimate. 

Representative  Newiiall.  For  the  rest  of  1916  and  1917? 

Mr.  Snow.  And  including  $100,000,  we  will  say,  for  the 
following  year, 

Representative  Newiiall.  Your  report  does  not  touch 
upon  that. 

Mr.  Snow'.  $200,000;  but  of  that  $200,000  practically 
half  of  it  is  made  necessary  — 

Representative  Newiiall.  Have  you  not  made  tlie  state- 
ment before  this  Commission  in  answer  to  a question  of  Mr. 
Eastman,  when  he  asked  you  how’  much  of  this  $566,000 


1917.] 


HOUSE  — No.  1875. 


311 


that  it  would  cost  the  Elevated  in  regard  to  new  paving, 
that  you  would  not  be  called  upon,  unless  the  city  of  Boston 
was  going  to  change  and  build  a new  road,  — did  you  not 
make  a statement  that  your  estimate  would  be  $200,000  or 
$250,000? 

Mr.  Snow.  Undoubtedly. 

Representative  Newhall.  A year? 

Mr.  Snow.  Yes.  $200,000  a year.  The  difference  is 
this  — the  suggestion  is  made  that  the  Legislature  might 
relieve  us  from  the  duty  of  paying  for  repaving  made  nec- 
essary by  the  city.  If  the  Legislature  will  go  still  further 
and  say,  not  only  that  city  will  pay  for  the  cost  of  the  re- 
paving, but  shall  also  pay  us  back  for  the  cost  of  the  neces- 
sary changes  in  our  tax,  then  we  will  save  $200,000.  I 
cannot  conceive,  however,  that  the  Legislature  will  require 
the  city  to  pay  us  back  the  cost  of  changing  our  tracks  as 
well  as  the  cost  of  the  repaving.  Therefore,  if  all  they  did 
was  to  cause  the  city  to  pay  us  the  cost  of  the  repaving,  we 
would  still  have  $100,000,  for  the  cost  of  the  track  work 
made  necessary  by  the  repaving. 

Commissioner  Macleod.  So  that  the  only  amount,  in 
your  contention,  that  is  within  the  realm  of  practical  relief 
by  any  legislation,  would  be  approximately  $100,000  a year? 

Mr.  Snow.  Yes. 

Commissioner  Macleod.  That  estimate  of  $100,000  a 
year  looks  very  large,  in  view  of  the  figures  presented  by 
Mr.  Neal,  showing  that  the  average  annual  expenditure  for 
the  last  three  years  has  been  about  $16,000. 

Mr.  Snow.  The  city  of  Boston  has  allowed  this  to  ac- 
cumulate, and  I do  not  anticipate  that  represents  the  or- 
dinary annual  expenditure. 

Representative  Newiiall.  Why  do  you  have  these  figures 
on  page  35  so  misleading?  Are  all  the  figures  as  misleading 
as  those? 

Mr.  Snow.  I claim  they  are  not  misleading. 

Representative  Newiiall.  They  are  misleading  to  a lay 
man.  As  I read  page  35  I believe  they  are  misleading  to 
anybody  not  familiar  with  this  subject. 

Mr.  Snow.  In  what  respect? 


312 


BOSTON  ELEVATED  RAILWAY. 


[]\Iar. 


Representative  Newhall.  You  spoke  of  ^566,000.  I 
quoted  this  before:  “They  do  not  include  the  cost  of  paving 
made  necessary  by  changes  in  or  repairs  or  extensions  of  the 
company’s  tracks.”  Certainly,  at  a prior  meeting  you  made 
the  statement  that  $200,000  would  be  saved  in  answers,  I 
think,  to  questions  of  Mr.  Eastman.  I have  not  the  record 
here,  but  I think  that  is  the  statement  you  made,  and  you 
left  the  impression  with  me  at  least  that  $200,000  was  the 
saving  that  the  Boston  Elevated  w^ould  receive  if  you  did  not 
have  to  rebuild  these  streets. 

Mr.  Snow.  The  statement  that  I made  here  was  that  if 
the  city  did  this  amount  of  repaving,  which  they  said  they 
were  going  to  do,  it  would  cost  us  $200,000  more  for  certain 
years  than  it  cost  us  in  previous  years.  That  is  the  state- 
ment I made. 

Representative  Newhall.  I don’t  know'  that  you  made 
the  statement  “in  previous  years.”  I do  not  believe  that 
w'as  used  in  the  records.  The  figures  here  in  1914,  1915  and 
1916,  — the  figures  show"  that  1914  is  about  one-half  of  w'hat 
it  is  in  1916.  According  to  your  figures  here,  the  report 
show's  that  you  are  diminishing  each  year.  You  estimate 
$61,000  in  1916,  and  then  you  estimate  for  the  balance  of 
this  year  and  1917,  $566,000. 

Mr.  Snow'.  That  estimate  is  based  upon  w'hat  the  city 
authorities  say  they  are  going  to  do. 

Representative  Newhall.  They  may  tell  you  that  they 
are  going  to  do  a million  dollars  w'orth  of  business  the  fol- 
low"ing  year. 

Mr.  Snow.  What  they  have  told  us  is  shown  in  Ex- 
hibit “R.” 

Representative  Newhall.  I have  seen  that. 

Senator  Bates.  The  fact  is  that  the  city  council  and  the 
Mayor  are  fighting  for  about  a million  dollars  for  new'  streets, 
and  that  is  the  bunch  of  streets  that  is  coming  down  now'  to 
be  resurfaced.  It  is  an  unusual  amount. 

Rei)resentative  New'iiall.  Don’t  you  imagine  that  the 
city  council  will  still  continue  to  fight? 

Senator  Bates.  You  will  have  to  ask  Charlie  Lawler 
about  that. 


1917.] 


HOUSE  — Xo.  1875. 


313 


Representative  X’e'VVHALL.  If  this  repaving  of  streets 
in  the  city  of  Boston  is  going  to  cost  $50,000  or  $75,000  a 
year,  there  is  no  argument  on  the  proposition,  but  you  left 
the  impression  with  me  that  it  is  going  to  be  $200,000,  or 
$300,000,  each  year,  and  then  you  come  in  with  a bill,  and 
you  eliminate  it  entirely. 

]\Ir.  Snow.  I am  very  sorry  if  I do  not  make  myself 
clear.  What  I have  said  is  this,  — that  owing  to  the  fact 
that  the  city  had  delayed  taking  care  of  their  paving  re- 
quirement, they  have  a whole  bunch  coming  down  at  once, 
and  that  is  going  to  put  us  to  additional  expense,  which  we 
, have  not  been  put  to  before,  which  I estimated  in  one  year 
$200,000,  for  each  of  the  two  years,  and  that  statement  I 
believe  to  be  correct,  and  is  based  on  the  assumption  that 
the  city  does  the  amount  of  paving  in  those  two  years  that 
they  say  they  are  going  to  do. 

X^ow,  the  question  of  what  we  would  save  if  the  city  should 
be  compelled  to  pay  for  the  paving  itself,  is  an  entirely 
different  question.  We  would  not  save  the  whole  $200,000, 
we  would  save  only  about  half  of  it,  and  that  is  where  the 
$100,000  comes  from.  The  question  of  the  expense  that  we 
are  going  to  be  put  to  is  the  question  of  what  we  would  save 
if  the  city  was  going  to  pay  for  the  expense,  which  is  an- 
other thing. 

Representative  X^ewhall.  Then  the  bill  to  compel  the 
railroad  companies  to  repave  the  streets  would  not  be  rnuch 
of  a hardship  on  any  other  railroad  company.  It  would  not 
be  on  the  Elevated,  on  those  figures? 

Mr.  Snow.  If  you  consider  $100,000  a year  is  not  a hard- 
ship, why  no. 

Commissioner  Eastman.  You  estimated  that  half  of  this 
was  to  be  spent  in  the  balance  of  1916  and  1917.  Now,  we 
are  almost  through  six  months  of  the  year,  and  I do  not 
anticipate  an}'  paving  work  will  be  done  by  the  city  until 
the  snow  is  off  the  street  and  the  frost  is  out  of  the  ground. 
Now,  how  much  has  been  done  so  far  this  year? 

Mr.  Snow.  That  1 cannot  tell  you,  although  before  that 
estimate  was  made  up,  Mr.  Stewart  conferred  with  the  city 
officials,  and  they  told  him  when  they  expected  to  do  this. 


314 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


and  I understand  it  is  to  be  done  only  in  a small  part  of  the 
year.  It  is  not  work  extended  over  the  whole  calendar  year. 
I can  get  those  figures  and  give  them  to  you.  They  were 
given  to  Mr.  Stewart  as  to  what  streets  they  propose  to 
repave  before  June  30,  1917. 

Commissioner  Eastman.  A lot  of  this  work  applies  to 
other  cities  and  towns? 

Mr.  Snow.  Yes.  I can  give  you  the  details  of  how  that 
estimate  was  made  up,  but  I cannot  give  it  to  you  from 
recollection. 

Commissioner  Eastman.  Can  you  do  that? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  Another  thing.  A part  of  this 
work  which  represents  the  cost  of  track  work  on  the  part  of 
the  company,  that  track  work  might  be  necessary,  whether 
or  not  the  city  did  paving.  The  stretch  of  tracks  where  the 
paving  is  to  be  laid  may  need  renovation  anywa}' . 

Mr.  Snow.  I understand  that  none  of  the  work  included 
here  would  be  done  at  the  present  time  except  for  this  re- 
paving. That  I will  ask  about. 

Commissioner  ]\Iacleod.  The  total  amount  charged  up 
and  estimated  as  $566,000,  in  three  years  — 

Mr.  Snow.  I beg  your  pardon. 

Commissioner  Macleod.  I say,  the  total  amount  of 
money  expended  for  repairs  done  simultaneously  with  the 
change  in  the  paving  has  been  figured  in  there? 

Mr.  Snow.  Yes. 

Commissioner  Macleod,  Now,  as  I understand  the  situa- 
tion in  many  cases,  in  most  cases  that  does  not  represent 
work  that  is  entirely  wasted,  but  it  represents  work  that  has 
been  done  in  some  cases  somewhat  earlier  than  it  might 
otherwise  be  required  to  be  done. 

]Mr.  Snow.  Undoubtedly. 

Commissioner  Macleod.  And  the  company,  of  course, 
has  the  value  incidentally  through  having  the  track  in  con- 
dition where  the  necessity  of  doing  the  same  thing  on  its 
own  account  in  four  or  five  years  hence  is  gone? 

Mr.  Snow.  Undoubtedly  that  is  true.  Shall  I go  on  with 
this  statement? 


1917.] 


HOUSE  — No.  1875. 


315 


President  Wells.  Yes. 

Mr.  Snow. 

B.  That  remission  should  be  made  only  to  the  extent  required  to 
enable  the  company  to  pay  a proper  dividend.  Upon  the  question  of 
whether  that  dividend  should  be  5 per  cent  or  6 per  cent,  or  some 
intermediate  percentage  the  committee  expresses  no  opinion. 

I hope  that  when  they  express  the  opinion  it  will  be  6 per 
cent. 

Commissioner  Eastman.  Why,  Mr.  Snow? 

Mr.  Snow.  Because  I think  it  is  only  on  a 6 per  cent 
basis  that  the  stock  can  be  sold  at  par,  and  I think  that  is 
the  only  fair  basis. 

C.  That  such  remission  should  be  contingent,  annually,  upon  a 
certificate  of  some  public  tribunal,  vested  with  proper  authority  and 
supplied  with  necessary  funds,  to  the  effect 

1.  That  a certain  sum  is  required  to  pay  the  dividend  aforesaid  for 
that  year;  and 

2.  That  the  company  has  been  honestly  and  efficiently  managed 
during  the  period  in  question. 

This  certificate  should  be  sent  to  the  proper  official  of  the  Common- 
wealth who  will,  thereupon,  pay  the  company  accordingly  out  of  these 
taxes  which  will,  of  course,  have  been  retained  meanwhile  by  the 
Commonwealth. 

I will  pass  that  for  a minute,  if  I may,  and  take  up  the 
rest. 

D.  That  the  company  should  repay  to  the  Commonwealth  all  sums 
thus  remitted  together  with  interest  at  the  rate  of  4 per  cent  per  annum, 
in  the  following  manner,  i.e.,  in  any  year  hereafter  when  the  earnings 
of  the  company  shall  be  sufficient  to  pay  all  its  expenses,  taxes  and 
charges,  and  a 6 per  cent  dividend,  the  excess  of  earnings  over  said 
expenses,  taxes  and  charges  and  dividend,  shall  be  paid  to  the  Common- 
wealth on  account  of  the  sums  remitted  as  aforesaid,  and  such  annual 
payments  shall  continue  until  the  aggregate  of  all  sums  remitted  as 
aforesaid,  together  with  interest  as  aforesaid,  have  been  repaid  to  the 
Commonwealth. 

That  is  perfectly  fair,  and  is  in  the  bill  that  I have  drawn. 

E.  That  the  sums  remitted  should  either  be  withheld  proportion- 
ately from  the  existing  cities  and  towns  which  now  receive  them  or  be 
reapportioned  and  assessed  upon  some  other  plan,  and  that  the  sums 
repaid  should  be  apportioned  by  the  same  method. 


316 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


I have  no  opinion  to  express  in  regard  to  that.  At  the 
present  time  it  is  apportioned  on  the  basis  of  track  mileage. 

F.  That  no  remission  provided  in  this  plan  should  be  made  after 
the  year  1922,  but  the  obligation  of  the  company  should  continue  until 
the  total  amount  of  all  such  remissions,  with  interest  as  aforesaid,  shall 
have  been  paid  the  Commonwealth. 

I think  it  ought  to  continue  until  the  expiration  of  the 
present  subway  leases  instead  of  1922. 

G.  That  the  whole  plan  should  be  subject  to  acceptance  by  the 
company. 

Commissioner  Eastman.  How  important  do  you  regard 
that  plan? 

Mr.  Snow.  If  you  do  not  ask  for  a lot  of  more  subways, 
it  is  not  so  important,  but  if  there  is  going  to  be  a demand 
for  a lot  of  more  subways,  then  I think  it  is  important. 
Possibly  that  question  can  be  settled  when  the  request  for 
additional  subways  is  made. 

Commissioner  Eastman.  You  mean  that  the  Elevated 
would  be  willing  to  accept  the  obligation  of  any  additional 
subways,  if  it  was  assured  of  a 6 per  cent  dividend  for  a 
long  term  of  years? 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  Until  1936  as  the  minimum? 

Mr.  Snow.  I suggest  that  as  being  the  expiration  of  the 
present  subway  leases. 

Commissioner  Macleod.  Even  if  that  required  some  other 
form  of  contribution  than  the  remission  of  this  tax? 

IMr.  Snow.  That  may  be.  For  instance,  it  is  perfectly 
possible  that  in  connection  with  any  additional  subways, 
there  should  be  some  arrangement  as  made  in  New  York  and 
as  is  now  proposed  in  Philadelphia.  In  spite  of  what  IMr. 
Matthews  had  to  say  about  the  New  York  arrangement  with 
the  Interborough,  that  same  arrangement  has  been  recently 
made  in  the  form  of  a new  contract  with  the  Brooklyn  Rapid 
Transit  Company  in  regard  to  some  new  subways. 

Commissioner  Stone.  Is  that  a similar  arrangement  in 
Pliiladelphia? 


1917.] 


HOUSE  — No.  1875. 


317 


Mr.  Snow.  No.  What  I said  was  that  a somewhat  simi- 
lar arrangement  was  being  considered.  It  may  take  a differ- 
ent form,  but  I think  they  recognize  in  Philadelphia  that  the 
taxpayer  has  got  to  stand,  for  a number  of  years  at  least,  a 
part  of  the  cost  of  the  new  rapid  transit  facilities  that  they 
are  building  or  proposing  to  build  in  Philadelphia.  Whether 
it  will  take  the  exact  form  of  the  contract  between  the 
Inter  borough  and  the  city  of  New  York  and  the  Brooklyn 
Rapid  Transit,  I do  not  know.  They  have  not  got  as  far  as 
that.  In  fact,  they  have  been  considering  a different  method. 

To  come  back  now,  if  I may,  to  “C.” 

That  such  remission  should  be  contingent,  annually,  upon  a certifi- 
cate of  some  public  tribunal,  vested  with  proper  authority  and  sup- 
plied with  necessary  funds,  to  the  effect 

1 . That  a certain  sum  is  required  to  pay  the  dividend  aforesaid  for , 
that  year. 

That,  of  course,  must  be  ascertained  by  some  tribunal  out- 
side of  the  Boston  Elevated  Railway  Company,  and  in  the 
bill  that  I submitted  I provided  that  that  fact  should  be 
ascertained  by  the  Public  Service  Commission  and  certified 
by  them  to  the  treasurer  and  receiver  general. 

That  the  same  tribunal  should  issue  a certificate  only  after  the^com- 
pany  has  been  honest fy  and  efficiently  managed  during  the  period 
in  question. 

Now,  it  goes  without  saying  that  the  Elevated  Company  is 
not  going  to  have  any  tax  remitted  to  it  or  an^^  assistance 
given,  unless  it  is  efficiently  and  honestly  managed.  When 
you  come  to  ask  us  to  prove  it,  or  get  somebody  else  to  say 
it  is,  why,  it  seems  to  me  you  are  getting  into  a lot  of  prac- 
tical difficulty.  I know  of  no  yardstick  or  no  precise  measure 
by  which  you  can  determine  whether  a company  has  been 
efficiently  managed  or  not,  and  I find  upon  talking  with 
different  people  that  every  individual  that  I talked  with  has 
a different  idea  and  a different  standard  of  what  he  considers 
efficient  management;  and  you  can  get  as  many  opinions  on 
that  as  you  talk  with  different  people.  I don’t  know  whether 
it  is  possible  to  put  that  in  a definite  form  where  you  can  get 


318 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


a definite  expression  of  opinion  on  that  each  year  so  that  it 
is  practical  or  not.  If  it  is,  of  course,  I have  no  objection  to 
it,  but  I think  when  you  come  to  analyze  that  and  see  what 
any  tribunal  has  got  to  find,  and  the  possibility  of  the  differ- 
ent points  of  view  that  different  people  may  take,  that  you 
will  have  great  practical  difficulty. 

For  instance,  take  the  present  year  through  to  June  30, 
1917,  and  we  file  our  accounts  with  the  Public  Service  Com- 
mission, and  the  Public  Service  Commission  examines  our 
vouchers,  and  they  find  that  we  are  $200,000  shy,  then 
comes  the  question  of  whether  or  not  they  will  find  that  we 
have  been  efficiently  managed  or  not,  and  they  go  over  our 
accounts,  and  they  find  that  Gaston,  Snow  & Saltonstall 
have  been  paid  a certain  amount  for  legal  services,  and  they 
think  they  ought  to  get  somebody  else  to  do  it  for  less,  are 
they  going  to  find,  therefore,  that  the  company  is  inefficiently 
managed?  If  that  is  so,  this  comes  to  nothing.  I don’t 
know  whether  they  are  or  not.  So,  with  the  other  operations, 
the  other  expenses,  of  $12,000,000  or  $14,000,000  during  the 
year.  It  is  quite  a problem  to  put  up  to  decide.  Each  one 
of  them  may  have  different  ideas,  and  they  will  pass  upon 
that  specific  question  and  find  as  an  affirmative  fact  that 
that  company  has  been  managed  efficiently.  Each  individual 
has  got  to  say,  “ I could  not  have  done  any  better  if  I was 
in  the  place  of  the  management  myself.”  If  you  can  put 
this  in  in  a form  that  is  practical,  all  right. 

Commissioner  Eastman.  You  have  got  to  meet  it  in  some 
form. 

Mr.  Snow.  I understand. 

Commissioner  Eastman.  The  community  would  never 
agree  to  a remission  of  taxes  without  some  sort  of  a checker. 

Mr.  Snow.  I agree,  but  I think  there  is  another  way  to 
meet  it. 

President  Wells.  Mr.  Snow,  would  it  be  ])ossible  for 
some  member  of  the  Commission,  wlio  would  pass  judgment 
on  this  question,  to  be  appointed  by  the  Governor  on  the 
Board  of  Directors  and  also  serve  on  the  executive  commit- 
tee of  the  Board  of  Directors  during  the  entire  year?  In 
other  words,  lie  might  have  some  say  in  these  various  ex- 


1917.] 


HOUSE  — No.  1875. 


319 


penditures  that  may  come  up  in  advance,  rather  than  pass 
judgment  on  them  afterwards. 

Mr.  Snow.  Well,  .1  believe  along  that  line  that  the  way 
to  meet  this  situation  is  to  have  a representative  of  the 
public  on  the  Board  of  Directors  who  shall  take  part  in  what 
is  going  on. 

President  Wells.  He  ought  to  be  on  the  executive  com- 
mittee also,  ought  he  not? 

Mr.  Snow.  As  far  as  I am  personally  concerned,  I see 
no  reason  why  he  should  not  be  on  the  executive  committee, 
so  that  he  will  be  in  touch  with  everything  that  is  being 
done  at  the  time  it  is  being  done,  so  that  he  shall  take  part 
in  the  responsibility  and  take  part  in  the  determination  of 
these  things.  You  cannot  represent  six  months  or  a year 
later  to  some  third  person  the  situation  under  which  the 
management  came  to  a decision  twelve  months  ago;  they 
cannot  reproduce  those  conditions. 

Now,  as  to  whether  or  not  the  person  who  is  appointed 
should  be  a member  of  a tribunal  which  has  eventually 
got  to  give  some  certificate,  I do  not  know.  I think  there  is 
some  doubt  about  it,  because  then  I think  you  may  have  a 
conflict  between  that  particular  person  and  some  other 
member  of  the  tribunal. 

Commissioner  Allen.  What  would  you  suggest,  Mr. 
Snow? 

Mr.  Snow.  My  suggestion  is  that  the  Governor  ought  to 
appoint'. 

Commissioner  Eastman.  Suppose  that  person  on  the 
Board  of  Directors  and  on  the  executive  committee  disagrees 
with  the  majority,  — to  use  your  illustration  that  the  firm 
of  Gaston,  Snow  & Saltonstall  or  somebody  else  was  getting 
more  than  they,  ought  to  get,  or  that  the  company’s  methods 
were  not  what  they  should  be,  what  efi'ect  would  it  have  on 
the  remission  of  taxes  at  the  end  of  the  year? 

Mr.  Snow.  If  I was  in  that  place,  if  it  was  merely  a 
difference  of  judgment,  I would  not  do  anything,  if  I could 
not  convince  my  associates,  but  if  I thought  there  was  any 
recklessness  or  impropriety,  or  anything  of  that  kind,  I would 
report  it  to  the  Governor,  and  lie  would  report  it  to  the 


320 


BOSTON  ELEVATED  RAILWAY. 


[.War. 

Legislature,  and  the  whole  thing  would  be  wiped  out.  That 
is  what  would  happen.  I do  not  think  because  there  is  an 
honest  difference  of  opinion  in  regard  to  a thing  of  that 
kind,  — I do  not  think  merely  for  that  reason  he  should  do 
anything.  He  cannot  outvote  the  rest,  of  course. 

Commissioner  Allen.  Would  you  have  him  make  a cer- 
tificate of  this  or  not? 

Mr.  Snow.  I think  that  is  a pretty  tough  proposition. 

Commissioner  i\.LLEN.  I am  not  speaking  of  the  toughness 
of  the  proposition.  Other  than  to  put  a man  on  the  directo- 
rate, to  observe  and  object,  if  you  please,  and  use  all  proper 
methods  to  correct  any  error  of  judgment,  as  he  saw  it, 
although  he  was  defeated,  perhaps,  on  all  his  views,  his  say 
so  should  not  amount  to  anything,  other  than,  as  you 
suggest,  to  go  back  to  the  Governor  and  to  the  Legislature. 

Mr.  Snow.  I think  he  ought  to  go  back  to  the  Governor 
and  to  the  Legislature. 

Commissioner  Eastman.  Suppose  he  did  that,  the  real 
purpose  of  this  arrangement  is  to  enable  you  to  market  your 
securities  to  the  best  advantage.  Now,  wouldn’t  it  be  urged 
that  if  a man  went  back  to  the  Legislature  and  proposed  to 
wipe  out  this  arrangement,  that  Massachusetts  people  had 
taken  these  securities  on  the  strength  of  this  arrangement  for 
a term  of  years,  and  merely  because  of  one  man’s  judgment, 
who  disagreed  with  five  others,  it  would  be  a breach  of  faith 
to  upset  the  arrangement. 

Mr.  Snow.  Mr.  Eastman,  we  recognize  that  something 
has  got  to  be  done  here.  Of  course,  they  are  not  going  to 
remit  taxes  and  leave  us  free  to  run  this  road,  without  any 
direct  or  indirect  control.  Now,  we  are  going  to  take  our 
chances  in  any  honest  and  capable  citizen  on  the  Board  of 
Directors  and  the  executive  committee,  and  if  we  cannot 
convince  him,  or  lie  cannot  convince  us,  all  right,  but  we  will 
take  our  chances. 

President  Wells.  If  he  could  not  convince  you,  your 
tax  would  not  be  remitted  for  that  year. 

Mr.  Snow.  I do  not  think  merely  because  we  differe  1 that 
lie  ought  to  go  and  ask  to  have  this  law  re])ealed,  unless  he 
felt  that  we  were  really  disregarding  the  interest  of  the  public 


1917.] 


HOUSE  — No.  1875. 


321 


and  the  interest  of  the  company.  As  long  as  it  was  a mere 
difference  of  opinion  — 

Commissioner  Noyes.  Do  you  think  it  should  really 
centre  upon  one  man  representing  the  State  for  this  remis- 
sion of  taxes? 

Mr.  Snow.  Why  not? 

Senator  Bates.  You  would  have  the  remission  absolutely, 
and  the  only  remedy  that  other  man  would  have  would  be  to 
tell  teacher  about  it. 

Mr.  Snow.  Of  course,  you  know,  as  a matter  of  fact,  that 
that  is  a pretty  radical  remedy,  because  the  minute  that  man 
makes  up  his  mind  that  the  thing  is  not  being  run  right,  that 
is  what  the  public  would  believe,  and  that  is  what  the  Legis- 
lature would  believe. 

Commissioner  Eastman.  There  are  three  men  on  the 
Board  of  Directors  in  Philadelphia. 

Mr.  Snow.  Do  not  understand  me  that  I am  objecting  to 
this  certificate.  If  anybody  can  draw  up  a form  that  can  be 
decided  upon,  ^ which  is  perfectly  definite  and  in  practical 
form  — 

Commissioner  Eastman.  Do  you  think  you  can  draw  up 
one? 

Mr.  Snow.  I have  tried,  but  I have  not  been  able  to  yet. 

Commissioner  Quincy.  Isn’t  the  term  “efficiently  man- 
aged” most  elastic  in  its  conceptions? 

Mr.  Snow.  I think  it  is.  One  or  two  objected  to  the 
word  “efficient”  because  they  said  that  means  “efficiency 
engineers,”  and  they  did  not  want  to  have  anything  to  do 
with  that. 

Commissioner  Ellis.  I suppose  “efficiency”  means  rea- 
sonable efficiency,  with  reasonable  skill. 

Mr.  Snow.  Well,  I have  asked  eight  or  ten  different 
people  to  put  down  in  writing  what  they  were  to  determine 
by  that,  and  I got  six  or  eight  different  views. 

Senator  Bates.  Couldn’t  you  combine  the  sub-committee 
idea  with  your  idea  and  have  a sub-committee  of  three,  one 
of  whom  shall  be  a State  director  on  the  Elevated  and  let 
him  sit  through  the  year  and  re])ort  to  his  colleagues,  ajid  let 
it  be  their  combined  judgment  u])on  which  the  certificate 
would  issue. 


322 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  Snow.  I think  that  might  be  done. 

President  Wells.  Take  one  member  of  the  Public  Service 
Commission,  for  instance,  as  one  of  the  three,  and  possibly 
the  tax  commissioner. 

]\Ir.  Snow.  I would  agree  to  have  the  tribunal  that  was 
going  to  certify  on  the  question  of  efficiently  managed  to  sit 
in  with  the  directorate  and  pass  upon  those  things  as  they 
came  up. 

Commissioner  Ellis.  The  way  it  would  work  out  practi- 
cally would  be  this;  if  you  had  any  difficult  question  before 
you  and  were  afraid  that  at  the  end  of  the  year  there  would 
be  trouble,  I suppose  the  sensible  thing  would  be  to  get  hold 
of  the  Public  Service  Commission,  or  whoever  was  the 
tribunal  and  say  to  them,  “Now,  here  is  this  question;  we 
propose  to  settle  it  in  such  a manner,  and  we  think  it  is  only 
fair  that  you  fellows  should  give  us  a formal  expression  of 
opinion  now  instead  of  w^aiting  for  a year  to  find  out  how  it 
results.” 

Mr.  Snow.  I am  not  criticizing  the  Public  Service  Com- 
mission, but  I do  not  think  that  they  would  like  to  express 
an  opinion  in  advance  on  a thing  of  that  kind. 

Commissioner  Ellis.  Well,  it  would  certainly  go  a long 
way  toward  establishing  the  company’s  contention. 

Mr.  Snow.  Yes. 

Commissioner  Ellis.  That  they  had  endeavored  to  deal 
with  the  matter  efficiently. 

IVIr.  Snow.  Undoubtedly. 

Commissioner  Ellis.  If  they  had  laid  it  before  the 
Public  Service  Commission  and  gave  them  a full  chance  to 
object  before  the  thing  was  done. 

Mr.  Snow.  Undoubtedly. 

Commissiojier  Swain.  I understand  your  idea  is  simply 
to  have  one  State  representative  on  your  Board  of  Directors, 
— to  have  no  certificates  from  any  public  tribunal,  but  the 
State  re])resentative  shall  have  the  ])ower,  if  he  deems  the 
matter  of  sufficient  im])()rtance,  to  state  to  the  Cxovernor  and 
the  Legislature  that  in  his  o])inion  the  road  has  not  been 
properly  managed  that  year? 

Mr.  Snow.  Yes. 


1917.] 


HOUSE  — No.  1875. 


323 


Commissioner  Ellis.  What  is  to  happen  after  he  states  it? 

Mr.  Snow.  Of  course  what  I expect  would  happen  would 
be  the  repeal  of  any  legislation  for  the  remission  of  any  taxes. 

Commissioner  Ellis.  Doesn^t  this  law  contemplate  its 
being  more  or  less  of  a contract  between  the  State  and  the 
Elevated  for  a certain  period? 

Mr.  Snow.  It  must  be  a contract  during  good  behavior. 
It  is  simply  the  question  of  the  form  of  our  good  behavior. 

President  Wells.  Would  it  be  too  much  power  to  give  to 
this  indi\ddual  on  the  Board  of  Directors  the  authority  to 
issue  a certificate? 

Mr.  Snow.  What  I am  afraid  of  is  getting  anybody  to 
take  the  responsibility  of  issuing  an  affirmative  certificate. 
In  other  words,  it  is  quite  a different  thing  simply  not  to 
find  that  the  company  has  been  improperly  managed  than  it 
is  to  get  a man  to  pass  upon  the  thing  affirmatively.  He 
cannot  do  that  unless  he  familiarizes  himself  with  everything 
that  the  company  has  done  during  the  preceding  year. 

President  Wells.  If  he  was  on  the  Board  of  Directors  he 
would  be  in  a position  to  pass  judgment. 

Mr.  Snow.  He  would  be  in  a position  to  know  practically 
everything  that  was  going  on.  Of  course,  there  is  no  member 
of  the  executive  committee  that  knows  every  detail  of  every 
expenditure  that  the  company  makes.  It  would  be  utterly 
impossible. 

Commissioner  Ellis.  Your  objection  would  be  met,  to 
some  degree,  to  have  that  phrase  put  in  the  negative  instead 
of  the  affirmative. 

Mr.  Snow.  Yes,  I think  it  would  make  a great  difference. 

Commissioner  Ellis.  I do  not  understand  the  Commis- 
sion is  enamored  of  the  particular  form. 

Mr.  Snow.  I did  not  intend  so.  I take  no  exception  to 
the  idea  that  is  conveyed  there.  It  is  simply  a question,  when 
you  come  to  put  it  in  concrete  form,  as  to  how  you  can  do  it. 

Commissioner  Eastman.  You  now  say  it  would  be  very 
difficult  for  any  commission  to  attempt  to  express  a judgment 
as  to  whether  or  not  the  road  was  efficiently  managed,  and 
yet  in  your  statement  before  this  Commission  the  other  day 
you  said; 


324 


BOSTON  ELEVATED  RAILWAY. 


[]Mar. 

While  the  compan}’-  has  not  the  slightest  objection  to  any  investi- 
gation for  the  purpose  of  finding  out  whether  the  road  should  be  more 
efficiently  or  economically  managed,  it  believes,  in  view  of  the  facts 
and  information  which  are  already  in  the  possession  of  the  Public  Serv- 
ice Commission,  that  such  investigation,  if  necessary,  can  be  completed 
within  so  short  a time  as  not  to  seriously  delay  the  final  action  of  this 
commission. 

Mr.  Snow.  Yes. 

Commissioner  Eastman.  Are  not  those  two  things  incon- 
sistent? 

Mr.  Snow.  No,  I do  not  think  they  are  at  all.  I think 
it  is  one  thing  to  give  a formal  certificate  of  this  kind,  and 
probably  each  member  of  the  Public  Service  Commission 
would  have  a different  opinion  as  to  what  he  ought  to  do  to 
determine  the  question  of  efficiency.  Each  one  of  us  has  a 
general  idea  now,  and  probably  each  one  of  us  would  express 
an  idea  as  to  whether  the  company  is  ideally  managed;  but 
when  you  expect  us  to  give  a certificate  to  that  effect,  it  is  a 
different  proposition. 

Commissioner  Macleod.  Mr.  Snow,  without  going  into 
the  details  of  the  plan,  do  you  think  the  best  method  of 
handling  this  general  line  that  a sub-committee  report  some 
sort  of  a provision  at  a later  time,  fixing  the  remission  of 
these  taxes  from  year  to  year,  or  whether  it  would  be  better 
to  have  an  investigation  made  in  advance  in  the  face  of  such 
evidence  now  available  or  that  can  be  obtained  within  a 
reasonable  time,  and  then  lay  the  basis  for  your  legislative 
action  on  the  facts  so  found,  and  not  have  them  subject  to 
any  conditions  subsequent  at  a later  time? 

Mr.  Snow,  hly  own  feeling  in  regard  to  the  matter  is 
this,  that  any  investigation  that  you  might  make  now,  be- 
yond what  you  are  already  making,  would  simply  be  on  the 
question  as  to  whether  or  not  the  compajiy  in  the  past  has 
earned  as  much  as  it  ought  to  have  earned;  that  is  to  say, 
whether  it  has  been  extravagant  in  certain  expenditures,  or 
whether  it  could  have  saved  money.  It  is  an  investigation 
as  to  the  past.  Now  the  thijig  that  you  are  particularly 
interested  in,  it  seems  to  me,  is  that  in  the  future  — if  you 
give  us  assistance  — that  the  amount  of  that  assistiuice  re- 


1917.] 


HOUSE  — No.  1875. 


325 


quired  shall  be  as  small  as  possible.  Of  course,  supposing 
that  some  expert  found  in  the  past  that  the  road  had  been 
efficiently  managed  and  we  could  not  have  done  any  better, 
than  we  had,  that  would  not  do  any  good  if  in  the  next  five 
years  we  became  reckless  and  extravagant.  In  other  words, 
it  is  the  future  that  you  are  interested  in.  Of  course,  I 
realize  this,  probably  as  strongly  as  the  Commission  does, 
that  if  you  pass  a law  by  which  you  make  up  the  gap  in  our 
earnings,  that  in  a certain  way  we  have  got  no  inducement 
to  be  economical.  In  other  words,  we  have  the  Common- 
wealth behind  us  to  the  extent  of  $500,000  or  $600,000  a 
year,  or  if  we  fall  short  $500,000  or  $600,000,  they  make  it 
up.  That  is  the  difficulty  with  this  situation.  Now,  I do 
not  think  you  get  rid  of  that  difficulty  by  making  any  in- 
vestigation of  what  we  have  done  in  the  past.  It  is  the 
question  of  what  we  are  going  to  do  and  see  that  we  are 
held  up  to  the  highest  possible  standard  of  efficiency  or 
prudent  management.  So,  I think  the  important  part  of  it 
is  the  future  rather  than  the  past. 

Commissioner  Swain.  Do  you  approve  in  general  of  the 
committee’s  scheme? 

Mr.  Snow.  Yes.  Now,  I do  not  wish  to  mean  by  that  as 
shrinking  away  from  any  examination  or  investigation  that 
this  Commission  or  anybody  else  wants  to  make.  Now,  if 
you  want  to  get  anybody  else  — anybody  from  the  outside, 

I do  not  care  who  they  are  — to  come  here  and  say  whether 
the  road  could  be  better  managed  than  it  is,  why,  get  them. 
If  they  find  it  can  be,  we  will  take  the  benefit  of  their  sug- 
gestions for  the  future,  and  we  have  no  objection  to  that  at 
all,  so  long  as  that  examination  is  not  going  to  delay  or 
prevent  legislative  action;  but,  on  the  other  hand,  I cannot 
help  feeling  that  it  is  the  future  that  interests  you  a great 
deal  more  than  the  past. 

Commissioner  Macleou.  Well,  if  you  have  an  investiga- 
tion made  of  the  present  condition  and  the  i)ast,  and  also  the 
future,  I conceive  that  an  investigation  would  not  at  all  be 
limited  to  the  line  that  you  suggest,  that  the  result  of  such 
an  investigation  might  disclose  that  the  comi)any  iji  the  next 
two  or  three  years  might  be  reasonably  entitled  to  a contri- 


326 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


bution  directly  or  indirectly  up  to  a certain  amount;  and  if 
the  company  in  the  future  acted  extravagantly  and  exceeded 
that  amount,  why,  it  would  be  up  to  the  company  to  share 
the  effect  of  its  own  imprudence. 

Mr.  Snow^  Of  course  it  is  perfectly  possible  that  an  in- 
vestigation might  be  made  along  the  lines  of  ascertaining 
whether  or  not  certain  economies  and  improvements  were 
practicable  to  such  an  extent  that  it  would  make  any  finan- 
cial assistance  unnecessary.  I mean,  that  is  one  possible  line 
of  investigation.  I cannot  conceive  that  the  results  of  any 
possible  economies  or  improvements  would  be  such  as  to 
relieve  them  of  the  necessity  of  having  some  assistance. 

Commissioner  Macleod.  I should  approach  that  with  the 
same  frame  of  mind  that  you  do  in  regard  to  that. 

Mr.  Snow.  Yes. 

Commissioner  Macleod.  An  investigation  might  give  this 
Commission  some  intelligent  expert  assistance  in  judging  just 
what  the  financial  needs  of  the  company  w^ere  likely  to  be  in 
a two  or  three  year  period,  and  couldn’t  we  act  more  intel- 
ligently on  that  basis  than  we  could  without  having  such  a 
study  made? 

Mr.  Snow.  Of  course,  the  more  information  one  has,  the 
more  intelligently  one  can  act.  That  is  undoubtedly  true. 
On  the  other  hand,  the  biggest  factor,  in  my  judgment,  as  to 
the  future  financial  situation,  is  the  increase  in  business.  I 
think  more  depends  upon  that  than  any  other  one  thing,  and 
that  is  a matter  that  no  expert  can  express  an  opinion  upon. 

Com.missioner  Noyes.  As  a practical  matter,  and  knowing 
human  nature,  w^ouldn’t  the  fact  that  a public  tribunal  was 
going  to  check  up  your  records  and  expenses  in  certain  peri- 
ods, and  on  that  checking  up  would  depend  the  remission, 
have  a beneficial  influence  in  having  it  guard  against  what 
somebody  else  might  consider  extravagance?  Let  us  take 
your  own  case,  for  example.  You  spoke  of  a distinguished 
law  firm.  Under  this  proposed  system,  wouldn’t  you  have  a 
pretty  sure  case  before  you  permitted  yourself  to  go  to  any 
kind  of  ex])ense,  so  that  you  could  come  before  this  public 
tribunal,  if  any  item  was  criticized,  and  say,  “Gentlemen, 
this  item,  perhaps,  is  large,  but  we  were  authorized  in  doing 


1917.] 


HOUSE  — No.  1875. 


327 


so  — we  felt  entirely  warranted  in  doing  it,  and  we  are 
willing  to  have  you  look  into  it  very  carefully.”  It  seems  to 
me  there  would  always  be  that  subtle  influence  and  a real 
reason  for  doing  the  right  thing,  rather  than  having  one  man. 
As  a matter  of  fact,  putting  the  responsibility  up  to  one  man 
on  your  Board  does  not  appeal  to  me,  as  one  member  of  the 
Commission. 

Mr.  Snow.  Of  course,  that  is  undoubtedly  so.  There  is 
no  question  about  that.  Now,  this  is  an  executive  session. 
I would  like  to  know  whether  you  think  any  public  tribunal, 
subject  to  appointment,  could. possibly  for  five  years  in  suc- 
cession give  a certiflcate  that  any  road  in  this  State  was 
operated  efficiently? 

Commissioner  Noyes.  They  would  do  the  best  they  could. 

Mr.  Snow.  I understand.  Do  you  suppose  any  public 
tribunal  could?  Take,  for  instance,  our  own  case,  the  case 
of  the  Elevated.  The  Public  Service  Commission  knows  per- 
fectly well,  and  you  all  know,  that  lots  of  people  are  dis- 
satisfled  with  the  service  in  a particular  locality;  they 
complain  about  crowded  cars;  they  complain  about  all  sorts 
of  things.  Suppose  that  any  public  tribunal  for  five  years, 
in  the  face  of  that  complaint,  certified  that  the  road  was  being 
efficiently  managed,  how  long  would  they  keep  them  in  office? 

Commissioner  Ellis.  They  might  say,  “We  feel  that  there 
are  certain  things  that  the  Elevated  is  not  giving  the  right 
amount  of  attention  to,  and  ought  to  consider  this  and  that, 
and  yet,  on  the  whole,  we  think  they  are  honestly  and 
efficiently  managed.” 

Mr.  Snow.  That  is  true,  if  they  will  do  that. 

Commissioner  Ellis.  It  is  perfectly  possible. 

Commissioner  Noyes.  And  probable. 

Commissioner  Quincy.  Does  the  bare  term  “efficient” 
apply  to  100  per  cent  perfection?  I do  not  believe  any  cor- 
poration that  I should  examine  I could  mark  100  per  cent 
perfect  after  I got  through,  and  if  I could  not  mark  it  100 
per  cent,  I doubt  if  I could  give  it  a certificate  that  it  was 
efficiently  managed. 

Commissioner  Ellis.  You  might  use  the  word  “pru- 
dently.” 


328 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Commissioner  Macleod.  Reasonably  prudent. 

IVIr.  Snow.  I think  we  all  have  something  in  our  minds 
that  is  reasonable. 

. Senator  Bates.  We  inserted  the  words  “reasonably  effi- 
cient” in  the  report,  and  we  — 

]Mr.  Snow.  I think  what  we  all  have  in  mind  is  a reason- 
able proposition;  but  when  you  put  it  down  in  black  and 
white  and  get  somebody  to  sign  a certificate,  it  is  a good 
deal  of  a problem. 

Commissioner  Ellis.  If  our  minds  are  running  along  the 
same  lines,  it  seems  to  me  the  question  of  phraseology,  how- 
ever troublesome  it  may  be,  is  not  an  insuperable  difficulty. 

Mr.  Snow.  I have  spent  a great  deal  of  time  on  this 
phraseology. 

Commissioner  Quincy.  Shouldn’t  some  term  be  used  such 
as  “reasonable  economy,”  rather  than  “efficiently,”  “reason- 
able economy,  and  prudent”? 

Senator  Bates.  I think  we  meant  economy,  rather  than 
efficient,  because  “efficient”  refers  to  the  number  of  pole 
stops,  and  where  they  should  be  put  and  so  forth. 

Mr.  Snow.  I think  we  should  not  agree  with  Dorchester 
on  that,  would  we? 

Senator  Bates.  No,  we  have  had  trouble  on  that. 

Commissioner  Eastman.  Supposing  that  the  Elevated 
should  remain  just  as  it  is  now,  but  that  the  State  should 
guarantee  some  return  upon  its  securities,  assume  entire 
financial  responsibility  for  the  company,  — either  the  State 
or  some  portion  of  the  State,  — have  you  ever  thought  that 
it  would  be  possible  to  provide  in  some  way  for  public  man- 
agement, — some  designation  in  the  management  of  the  com- 
pany, — which  would  avoid  some  of  the  objections  which  are 
usually  raised  to  public  management? 

iNIr.  Snow.  No,  I have  not. 

Commissioner  Eastman.  Do  you  think  that  is  utterly  im- 
possible? 

Mr.  Snow.  Well,  I would  not  want  to  say,  because  I 
have  never  considered  it.  I don’t  know. 

(Commissioner  Ellis.  That  is  really  along  the  line  of  the 
one-man  director  intensified. 


1917.] 


HOUSE  — No.  1875. 


329 


Mr.  Snow.  Yes. 

Commissioner  Eastman.  At  the  present  time  your  stock- 
holders really  have  very  little  to  do  with  appointing  the  man- 
agement of  the  company.  The  average  stockholder  receives 
his  dividends  and  he  trusts  to  the  powers  that  be.  The 
management  is  really  selected  by  a certain  group  of  finan- 
ciers. Now,  donT  you  think  it  would  be  possible  in  such  a 
way  to  substitute  for  those  financiers  some  representatives 
of  the  public,  who  would  designate  the  management  and  be 
"responsible  for  it  and  avoid  at  the  same  time  the  usual  ob- 
jections to  public  management? 

]Mr.  Snow.  Well,  of  course,  I don’t  know.  Something 
might  be  worked  out  along  those  lines.  Of  course,  I think 
the  difficulty  with  that  situation,  it  seems  to  me,  would  be 
this:  What  incentive  would  your  managenaent  have  to  keep 
up  with  the  times  and  to  introduce  additional  economies,  if 
they  were  designated  by  some  public  authority,  dividends 
being  guaranteed? 

Commissioner  Eastman.  Well,  they  would  have  about  the 
same  incentive  as  you  would  have  under  the  arrangement 
whereby  dividends  would  be  practically  assured. 

Mr.  Snow.  No,  I do  not  think  so,  because  if  you  had  a 
public  management  you  would  have  no  certificate  to  upset 
at  the  end  of  the  year. 

Commissioner  Eastman.  You  would  have  the  incentive 
to  avoid  the  criticism  that  would  fall  upon  their  heads  if  the 
tax  was  falling  upon  them,  and  if  they  did  not  get  the  divi- 
dends. 

Mr.  Snow.  It  would  be  a public  criticism,  of  course. 

Commissioner  Eastman.  Because  you  have  got  here 
something  that  comes  home  to  every  man  that  uses  the 
streets. 

Mr.  Snow.  Yes. 

Commissioner  Swain.  Mr.  Snow,  you  have  seen  the  plan 
of  the  committee  and  how  far  it  goes.  I want  to  know 
whether  you  feel  that  would  give  adequate  relief.  We  are 
required  by  the  act  to  consider  the  possible  extensions  of 
your  service.  The  ]\Iayor,  in  his  statement,  criticized  that 
and  spoke  of  new  subways,  and  said  we  should  do  something. 


330 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


If  we  find  anything  ought  to  be  done  we  should  do  some- 
thing that  would  give  adequate  relief.  Now,  it  would  be 
unfortunate  after  adequate  relief  was  given  that  the  com- 
pany should  appear  and  say  we  cannot  take  on  any  more 
subways  and  any  more  additional  facilities.  Do  you  think 
this  would  give  adequate  relief,  — the  plan  of  the  committee? 

Mr.  Snow.  You  mean  to  enable  the  company  to  assume 
additional  subways  besides? 

Commissioner  Swain.  What  would  be  the  attitude  of  the 
company  if  the  relief  contemplated  by  the  report  of  the  com- 
mittee was  given? 

Mr.  Snow.  I think  the  attitude  of  the  company  would  be 
this:  That  is,  we  will  assume  that  such  relief  or  legislation 
authorizing  this  was  enacted,  and  then  immediately  there 
was  a suggestion  made  for  a new  subway,  and  we  will  assume 
that  that  new  subway  would  take  three  years  to  build,  and 
that  we  would  not  have  to  begin  to  pay  rental  for  three 
years.  I think  we  should  take  the  position  that  so  far  as  that 
new  subway  is  concerned  we  ought  not  to  be  required  to 
pay  any  rental  which  would  jeopardize  our  6 per  cent 
dividend.  Of  course,  if  the  taxpayers  were  willing  to  con- 
tinue their  contribution  so  that  we  could  assume  the  addi- 
tional rentals  and  pay  our  6 per  cent  dividend,  there  would  be 
no  objection. 

Commissioner  Macleod..  Do  you  think  that  the  remis- 
sion of  this  franchise  tax  would  be  sufficient  to  provide  for  a 
6 per  cent  revenue  on  the  basis  of  present  facilities  and  also 
leave  a margin  to  take  care  of  additional  demands  upon  the 
company  for  rentals,  for  future  subways? 

IVIr.  Snow.  I think  that  depends  very  largely  upon  the 
extent  of  the  increase  in  business. 

Commissioner  Ellis.  It  has  been  suggested,  ]\Ir.  Snow, 
that  it  might  be  a good  plan  to  have  a clause  in  here  by 
wliich  the  plan  would  provide  that  a certain  percentage  of 
the  money  furnished  by  the  State  should  be  used  for  exten- 
sion purposes. 

Commissioner  Quincy.  You  mean  to  i)ay  rent  for  new 
subways? 

Commissioner  Ellis.  Yes.  Because  it  has  also  been 


1917.] 


HOUSE  — No.  1875. 


331 


pointed  out  that  plan  presented  by  this  Commission,  in 
order  to  stand  any  real  chance  of  going  through  the  Legis- 
lature, would  have  to  present  something  that  would  interest 
the  men  who  are  pressing  extensions.  How  would  some  such 
thought  impress  you  offhand?  It  would  be  entirely  offhand. 

Mr.  Snow.  Well,  in  other  words,  of  course,  as  far  as  this 
plan  is  concerned,  you  are  simply  proposing  to  pay  over  to  us 
an  amount  of  taxes  equal  to  our  deficit.  Now,  do  you  mean 
that  instead  of  paying  over  to  us  an  amount  of  taxes  equal  to 
the  deficit,  you  are  only  going  to  pay  us  50  per  cent  and 
keep  the  other  50  per  cent,  so  that  we  would  not  have 
enough  to  pay  our  6 per  cent  dividends? 

Commissioner  Ellis.  That  would  be  its  effect,  I suppose,’ 
wouldn’t  it? 

Mr.  Snow.  It  wmuld,  from  our  standpoint. 

Commissioner  Macleod.  Of  course,  this  legislation  is  put 
up  in  this  resolve  largely  from  the  standpoint  of  dealing  with 
the  situation  in  a way  that  is  going  to  permit  these  improve- 
ments being  made.  That  is  the  thing  that  is  given  emphasis 
in  the  resolve,  as  I recall  it,  rather  than  the  financial 
trouble  of  the  present  stockholders  of  the  road. 

Mr.  Snow.  Yes. 

Commissioner  Macleod.  And  if  a certain  amount  of 
money  is  remitted  entirely  on  the  theory  of  making  up  any 
business  losses  to  the  stockholders  of  the  company,  without 
any  provision  or  anything  that  could  be  utilized  for  future 
improvements,  what  guarantee  would  such  action  give  for 
the  purpose  of  this  resolve  being  tried  out?  In  other  words, 
if  this  does  not  take  care  of  that  future  situation,  ought  not 
this  Commission  to  deal  with  the  question  as  to  what  prac- 
tical arrangements  can  be  made  in  the  way  of  leases  of  future 
subways? 

Mr.  Snow.  I submitted,  or  sent  to  the  sub-committee,  at 
their  request,  a draft  of  a bill  which  I prepared  covering  this 
particular  form  of  relief,  and  it  is  now  included  in  the  set 
which  I have  filed  with  the  full  Commission.  In  that  I have 
inserted  a provision  authorizing  the  Public  Service  Commis- 
sion to  increase  the  rate  of  fare  if  the  taxes  are  not  sufficient 
to  take  care  of  the  situation.  Of  course,  that  covers  the 


332 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


situation  that  you  are  asking  for  about  new  subways.  And 
then,  if  anybody  wanted  a new  subway,  all  right.  If  that 
imposes  a burden  that  we  cannot  take  care  of,  or  the  taxes 
cannot  take  care  of,  then  we  will  go  to  the  Public  Service 
Commission  and  ask  them  to  increase  our  fare.  I mean  that 
takes  care  of  that  situation  in  that  way. 

Commissioner  Macleod.  Did  you  recognize  any  differ- 
ences in  the  situation  with  reference  to  dealing  with  new 
subways  where  a contract  was  made  by  all  parties  with  their 
eyes  open,  and  the  effect  of  dealing  with  that  situation  based 
on  the  change  of  contracts  being  made  on  a different  basis? 

Mr.  Snow.  There  is  nothing  in  the  legislation  that  I have 
drawn  that  refers  to  that.  I believe  that  when  the  question 
of  new  subways  comes  up  it  should  be  considered  from  this 
standpoint:  In  the  first  place,  that  a new  subway,  as  a rule, 
is  not  operated  to  its  full  capacity,  or  anything  like  it  in  the 
beginning.  The  subway  is  operated  for  ten,  fifteen  or  twenty 
years  before  you  can  say  it  begins  to  pay  for  itself.  Now 
one  suggestion  that  we  have  had  in  mind  was  that  there 
should  be  a sliding  scale  of  rental;  that  the  rental  for  the 
first  few  years  should  be  a low  rate,  and  then  eventually  in- 
creased, so  that  at  the  end  of  the  term  the  average  rate  of 
the  rental  will  be  a fair  one.  That  enables  the  company  to 
take  over  the  subway  in  the  beginning  without  an  undue 
charge. 

Commissioner  Macleod.  Have  you  considered,  for  the 
specific  purpose  of  meeting  the  question  of  rental  under  that, 
some  such  scheme  of  that  kind?  Wouldn’t  it  be  a much 
more  popular  measure  and  be  received  with  public  support? 

Mr.  Snow.  It  undoubtedly  would,  but  at  the  present 
time  that  would  involve,  would  it  not,  this  Commission 
determining  as  to  what  new  subways  should  be  built,  if  any? 

Commissioner  Macleod.  I do  not  think  so.  Not  at  all. 

Mr.  Snow.  Then,  if  something  could  be  drawn  in  general 
terms  without  that  — I sliould  not  want  to  express  an 
opinion  offhand,  but  I am  not  sure  that  it  may  not  be  done. 

Commissioner  Eastman.  i\Ir.  Snow,  I wotild  like  to  get 
your  idea  as  to  how  that  situation  ought  to  be  met.  If  the 
State  should  become  a j)artner,  in  a way,  of  the  Elevated 


1917.] 


HOUSE  — No.  1875. 


333 


through  the  remission  of  taxes,  it  would  be  necessar}^,  not 
only  to  guard  against  inefficiency  and  waste  on  the  part  of 
the  management,  but  also  against  undue  generosity.  There 
are  always  people  who  want  subways  and  always  will  be,  and 
some  public  body  has  got  to  decide  what  the  real  public 
needs  are  as  to  what  subways  are  to  be  built.  Now,  do  you 
think  that  matter  ought  to  be  left,  as  it  has  in  the  past, 
simply  to  the  Legislature  and  affected  by  public  pressure 
on  the  Legislature,  or  whether  or  not  there  should  not  be 
somebody  to  go  into  the  thing  and  determine  in  some  more 
scientific  way  what  the  real  needs  are? 

Mr.  Snow.  Well,  there  is  only  one  answer  to  that  ques- 
tion. The  question  answers  itself.  Of  course,  it 'would  be  a 
great  deal  better  if  some  responsible  tribunal  could  figure  out 
those  things  in  advance.  There  is  no  question  about  it. 

Commissioner  Eastman.  Do  you  think  it  would  be  feasi- 
ble to  give  that  tribunal  entire  power  over  the  situation? 

Mr.  Snow.  We  should  be  very  glad  if  it  could  be  done 
that  way. 

Commissioner  Eastman.  Do  you  think  it  feasible? 
Would  the  Legislature  ever  surrender  that  power? 

Mr.  Snow.  I don’t  know.  I think  you  could  answer  that 
question  as  well  as  I could. 

. Commissioner  Quincy.  Might  it  not  be  possible  to  go  as 
far  as  Congress  does  in  the  case  of  rivers  and  harbors  appro- 
priations, where,  as  I understand  it,  no  river  and  harbor 
appropriation  can  be  considered  by  Congress  until  at  least  it 
has  been  reported  upon  by  the  army  engineers?  The  Legisla- 
ture might  v^ry  well  go  as  far  as  that,  and  by  rule  or  other- 
wise make  a provision  that  no  petition  for  a new  subway 
should  be  considered  or  acted  upon  until  first  reported  by 
whatever  public  board  is  intrusted  with  that  duty.  That 
does  not  mean  that  the  report  would  not  be  overridden  by 
the  Legislature,  but  it  would  very  rarelj^  be  done. 

Commissioner  Allen.  Mr.  Snow,  if  I understand  your 
position,  if  you  are  in  any  form  guaranteed  the  0 per  cent 
and  so  forth,  whether  this  tribunal  has  the  right  to  decide, 
be  it  the  Legislature,  or  any  one  else,  and  those  expenses  are 
to  go  in,  and  you  should  say,  “You  are  to  hold  us  harmless,” 


334 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


doesn’t  that  mean  of  necessity  that  this  law  that  we  are  to 
report,  or  whatever  is  to  come  out  of  this  report,  is  per- 
petual in  its  nature;  it  is  not  temporary?  We  are  trying  to 
get  you,  as  most  of  us  believe,  out  of  a temporary  difficulty, 
and  that  in  time  — three  or  four  or  five  years,  or  whatever 
the  time  may  be  — I understand  you  to  say  until  1936  — 
isn’t  it  true  that  if  those  subways  have  not  been  paid  for  at 
the  end  of  1936  that  the  agreement  should  still  continue  or 
you  should  be  held  harmless? 

Mr.  Snow.  My  feeling,  Mr.  Allen,  is  this,  that  with  an 
arrangement  by  which  the  State  is  going  to  pay  us  back,  or 
remit  our  taxes  in  part,  we  are  less  likely  to  get  new  subways. 
In  other  words,  every  time  anybody  wanted  a new  subway  the 
taxpayers  are  going  to  be  interested  in  that  question.  The 
taxpayers  are  going  to  make  themselves  felt  on  anything  of 
this  kind,  and  we  would  like  their  assistance. 

Commissioner  Allen.  That  is  so,  but  assuming  that  the 
Legislature  passed  an  additional  bill,  you  would  want  this 
agreement,  or  whatever  the  act  called  for,  to  run  until  the 
expiration  of  that  subway? 

Mr.  Snow.  Yes. 

Commissioner  Allen.  It  might  be  thirty  or  forty  years. 

Mr."  Snow.  I should  say  that  all  subway  contracts  ought 
to  be  made  to  terminate  in  1936.  In  other  words,  the  pres- 
ent theory  is  that  they  should  all  terminate  at  the  same 
time.  I think  it  is  a much  better  w^ay  to  deal  with  these 
contracts,  to  have  them  terminate  at  one  time  rather  than 
at  different  times. 

Commissioner  Allen.  The  feeling  of  this  Commission  is, 
as  I understand  it,  that  they  should  terminate  in  1922. 

Mr.  Snow.  Yes. 

Commissioner  Allen.  Now,  you  say  that  is  not  long 
enough? 

]\Ir.  Snow.  Not  if  we  are  going  to  have  new  subways. 

Commissioner  Allen.  How  do  you  fix  any  additional 
date  that  it  should  stop,  that  it  should  take  care  of  all 
existing  subways  from  time  to  time? 

Mr.  Snow.  Of  course,  the  date  I fix  is  1936  in  my  act,  or 
the  termination  of  the  subway  leases. 


1917.] 


HOUSE  — No.  1875. 


335 


Commissioner  Allen.  You  mean  to  have  one  coincide 
with  the  other?  That  as  soon  as  your  obligation  to  pay.  this 
rental  ceased,  then  it  was  all  off? 

Mr.  Snow.  Yes.  ^ 

Senator  Bates.  Why.  isn’t  the  termination  of  the  1887 
contract  more  logical? 

Mr.  Snow.  Because  what  we  are  trying  to  cover  ourselves 
against  are  the  subway  rentals.  They  have  no  reference  to 
the  termination  of  the  1887  contract. 

Senator  BATEfS.  In  1922  you  will  be  relieved  from  your 
5-cent  fare?  In  1922  there  will  not  be  any  legislative  pro- 
hibition for  an  increase  of  fare? 

Mr.  Snow.  No. 

Commissioner  Eastman.  If  you  had  the  permission  for  a 
remission  of  taxes  standing  until  1936,  and  if  you  had  in  the 
bill, no  provision  about  possible  increases  in  fares  after  1922, 
and  no  further  action  was  taken  by  the  Legislature,  you  feel 
you  could  increase  your  fares,  like  any  other  street  railway? 

Mr.  Snow.  Yes. 

Commissioner  Ellis.  I think  that  point  has  got  to  be 
met  in  the  way  of  linking  up  this  bill  with  future  extensions. 

Mr.  Snow.  I think,  as  a practical  matter,  it  is  linked  up 
in  the  way  I say.  That  is,  under  the  bill  that  I offer,  there 
is  adequate  provision  not  only  for  existing  subways,  but  for 
future  subways.  In  other  words,  that  bill  does  provide,  or 
authorizes  the  raising  of  sufficient  revenue  to  provide  for 
additional  facilities. 

Senator  Bates.  It  would  not  be  hard  to.  add  a paragraph 
to  our  bill,  if  the  Legislature  authorizes  new  subways,  that 
this  same  public  body  may  determine  is  necessary,  to  remit 
part  of  these  taxes  for  that  purpose,  and  that  on  the  con- 
struction or  the  authorization  of  those  existing  tunnels  part 
of  the  franchise  tax  may  be  remitted  for  that  purpose. 
Then  we  could  label  this  act,  “An  Act  to  enable  the  Boston 
Elevated  to  finance  the  present  and  future  tunnels.” 

Mr.  Snow.  Including  one,  I take  it,  to  Codman  Square? 

Commissioner  Eastman.  Has  the  management  of  the  Ele- 
vated any  clear  idea  as  to  what  subways,  if  any,  ought  to  be 
created  right  off? 

Mr.  Snow.  Can  I say  this  without  committing  anybody? 


336 


BOSTON  ELEVATED  RAILWAY. 


[^lar. 


Commissioner  Noyes.  We  don’t  know  yet. 

Mr.  Snow.  Well,  I will  tell  you.  You  have  asked  me  the 
question,  — I will  not  speak  for  the  management,  but  I will 
say  myself  as  to  what  I think  the  next  thing  ought  to  be 
done  is  an  extension  out  to  Dorchester  from  Andrew  Square. 
I think  that  should  be  the  next  step. 

Senator  Bates.  You  cannot  give  us  any  advance  in- 
formation as  to  which  way  that  is  going? 

Mr.  Snow.  You  understand  I am  not  committing  the 
management.  There  is  no  doubt  about  it,  the  Washington 
Street  tunnel  is  overtaxed  at  the  present  time;  I mean  at 
certain  times  of  the  day,  and  the  relief  is  going  to  be,  I 
believe,  through  the  Dorchester  tunnel. 

Representative  Lawle^r:  I rode  out  on  a car  the  other 
night  — this  is  for  the  information  of  the  Commission  — I 
got  on  the  car  down  near  a dry  goods  house,  and  rode  to 
Edward  Everett  Square,  and  the  conductor  missed  ten  or 
twelve  fares.  They  were  on  the  running  board  and  on  both 
sides  of  the  car,  and  it  was  impossible  for  the  conductor 
to  get  the  fares. 

^Ir.  Snow.  I do  not  want  anybody  to  get  up  and  tell  the 
legislative  committee  that  the  Elevated  Railroad  said  this 
was  necessary,  because  I do  hot  speak  for  the  management. 
My  own  feeling  is  that  an  extension  out  in  that  direction  will 
largely  relieve  the  Washington  Street  tunnel  A great  many 
people  going  out  around  Upham’s  Corner  and  in  that  vicinity 
go  through  the  Washington  Street  tunnel,  and  I believe  an 
extension  of  the  tunnel  from  Andrew  Square  will  accommo- 
date a great  many  of  those  people. 

Commissioner  Eastman.  It  will  be,  when  it  is  open  to 
Andrew  Square. 

]\Jr.  Snow.  It  will  be  to  a great  extent,  and  to  a greater 
extent  when  it  is  extended.  1 do  not  mean  this  year. 

(Ymmissioner  Ellis.  Don’t  you  also  think  that  there  is  a 
very  serious  condition  in  the  Tremont  Street  subway  from 
Park  Street  beyond  Boylston? 

Mr.  Snow.  Erom  Park  Street  beyond  Boylston? 

(Commissioner  Ellis.  The  Tremont  Street  subway  from 
Park  Street  to  where  the  Boylston  Street  subway  tai)s  the 
Tremont  Street  subway. 


1917.] 


HOUSE  — No..  1875. 


337 


Mr.  Snow.  Well,  that  I am  not  prepared  to  say. 

Commissioner  Ellis.  Just  go  down  there  to-night  at  half- 
past 5 and  try  it. 

Commissioner  Quincy.  Couldn’t  we  ask  our  committee  to 
continue  its  work  in  the  light  of  Mr.  Snow’s  statement  and 
his  bills,  and  report  more  specifically  to  a future  meeting? 

President  Wells.  The  sub-committee  can  answer  that 
question. 

Commissioner  Ellis.  I think  perhaps  some  other  commit- 
tee should  take  up  this  particular  end.  It  seems  to  me  that 
some  committee,  or  the  Commission  as  a whole,  ought  to 
consider  that  important  point  of  how  this  general  scheme  can 
be  linked  up  to  the  plan  of  subway  improvements  or  exten- 
sions. I do  not  think  our  committee  wishes  to  shirk  the  work 
in  any  way,  and  it  shall  be  glad  to  do  it  if  the  Commission 
desires. 

President  Wells.  In  view  of  the  fact  that  your  sub- 
'.ommittee  is  more  familiar  with  it  than  any  other  sub-com- 
mittee that  should  be  appointed,  I think  you  should  continue. 

Commissioner  Quincy.  I move  that  the  same  sub-com- 
committee  be  continued  with  a request  to  report  further,  and 
possibly  with  a specific  bill  embodying  recommendations. 

President  Wells.  You  have  heard  the  motion.  Is  it 
seconded?  • 

Commissioner  Ellis.  I do  not  think  the  specific  bill  is 
an  important  part  of  it.  At  least,  I do  not  think  it  ought  to 
be  made  a part  of  it,  because  there  is  no  use  of  getting  down 
to  the  point  of  drawing  a specific  bill  until  the  Commission 
has  agreed  upon  the  plan.  After  that  it  is  merely  a question 
of  draftsmanship'.  It  simply  delays  the  work  of  the  Com- 
mission to  have  this  committee  drafting  a bill  at  this  time. 

Commissioner  Quincy.  My  assumption  was,  Mr.  Chair- 
man, that  the  recommendations  of  the  committee  had  been 
received  with  sufficient  favor  both  by  the  representative  of 
the  Elevated  Road  and  in  our  discussions  to  have  reached  the 
bill-drafting  stage.  I am  willing  to  take  out  the  specific  bill 
if  they  are  not  ready  for  it. 

[The  motion  as  amended  was  seconded  and  carried.] 


Adjourned. 


338 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


TENTH  DAY. 

Blearing  held  at  room  362,  State  House,  Boston,  IMass.,  at 
2 p.M.  on  December  27,  1916. 

Sitting.  — President  Wells,  Senators  Bates  and  Bddridge, 
Representatives  Jewett,  Newhall  and  Lawler,  Commissioners 
Macleod,  Meaney,  Stone,  Eastman  and  Russell  [of  the  Public 
Service  Commission],  and  Commissioners  Swain,  Allen,  Ellis 
and  Quincy  [of  the  Boston  Transit  Commission]. 

Absent. — The  Lieutenant-Governor,  Speaker  Cox,  Com- 
missioner Noyes  and  Representative  Donovan. 

Commissioner  Macleod.  The  Commission  will  come  to 
order.  The  Lieutenant-Governor,  who  is  chairman  of  this 
Commission,  has  sent  word  that  he  is  detained  by  a meeting 
of  the  Council,  but  expects  to  join  us  later.  ^Meantime  he 
expresses  a desire  that  this  Commission  should  come  to  order 
and  proceed  to  the  consideration  of  such  business  as  came 
before  it  at  this  time. 

I understand  that  members  of  the  Finance  Commission  of 
the  city  of  Boston  are  here  who  desire  to  be  heard,  and  I 
believe  ]\fr.  McDonald  also  desires  to  be  heard  with  reference 
to  a plan  which  he  has  already  submitted  to  this  Commis- 
sion in  writing.  If  the  members  of  the  Boston  Bdnance  Com- 
mission desire  to  make  a statement  at  this  time,  the  Com- 
mission will  be  glad  to  hear  them. 

John  li  Murphy,  Esq.,  Chairman  of  the  Finance  Commission 
of  the  City  of  Boston. 

IMr.  Chairman,  tlie  Boston  I'inance  Commission  have  not 
any  lengthy  statement  to  make.  I am  delegated  by  them  to 
say  tliat  they  are  opposed  to  any  action  on  the  part  of  this 
committee  that  will  necessitate  the  increase  of  the  taxes  in 
th.e  city  of  Boston.  On  the  other  phases  of  the  (question  we 
have  no  oi)inion  at  the  ])resent  time  to  exj)ress.  It  is  just 
])ossible  that  the  Commission  may  desire  to  submit  their 
views  in  writing. 


1917.] 


HOUSE  — Xo.  1875. 


339 


Commissioner  Macleod.  Has  this  matter  been  officially 
considered  by  your  Commission? 

Mr.  Mukphy.  It  has  been  officially  considered  on  that 
phase  of  the  question,  namely,  that  they  do  not  believe, 
under  any  circumstances,  that  there  should  be  a rebate  of  the 
taxes  to  the  railroad,  so  that  the  taxpayers  of  the  city  of 
Boston  should  be  compelled  to  pay  increased  taxes,  and  that 
phase  only. 

Commissioner  Allen.  Increased  or  excessive? 

Mr.  Murphy.  Increase  means  excessive. 

Commissioner  Allen.  Do  you  object  to  any  plan  which 
would  require  any  abatement  of  taxes? 

Mr.  Murphy.  Anything  that  would  cut  down  the  taxes 
of  the  Elevated  road,  so  as  to  increase  the  taxes  of  the 
balance  of  the  taxpayers  of  Boston.  That  is,  we  object  to 
having  the  problem  solved  on  that  basis. 

Commissioner  Allen.  I understood  you  to  use  the  word 

excessive.” 

Mr.  Murphy.  I may  have,  but  if  I did  it  was  uninten- 
tional. As  I said,  we  are  not  here  to-day  to  make  any 
lengthy  statement  or  argument,  but  to  put  ourselves  on 
record  on  that  phase  of  the  question,  with  this  possible  pro- 
viso, that  the  Commission  may  desire  to  submit  in  writing  a 
report. 

Commissioner  Macleod.  I should  like  to  inquire  if  your 
Commission,  in  reaching  this  conclusion,  considered  any  al- 
ternative plan  that  may  be  found  if  some  form  of  relief  was 
necessary  to  the  company? 

Mr.  Murphy.  They  have  discussed  that  phase  of  the 
question,  and  they  have  expressed  no  opinion  on  just  how  it 
was  to  be  accomplished.  I am  of  the  opinion  that,  without 
any  doubt,  the  question  can  be  solved  Avithout  adding  to  the 
taxes. 

Commissioner  Macleod.  Has  the  Commission  officially 
considered  the  two  alternatives  of  an  increase  in  fares  and 
some  remission  of  taxes,  and  is  it  prepared  to  say  that  if 
relief  must  come  through  one  channel  or  the  other,  that 
your  Commission  favors  an  increase  in  the  rates  rather  than 
any  remission  of  the  existing  taxes? 

Mr.  Murphy.  There  was  no  vote  taken  on  that  phase  of 


340 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


the  question,  so  I am  not  in  a position  to  speak  for  them,  and 
I do  not  want  to  speak  individually  for  myself  at  the  present 
time.  That'  is  why  I said  it  is  more  than  possible  that  the 
Commission  may  like  to  make  up  their  minds  to  submit  a 
written  report.  They  have  considered  all  the  phases  of  the 
question. 

Commissioner  Ellis.  On  a prima  facie  consideration  of 
the  case,  you  are  disinclined  to  see  any  relief  afforded  out 
of  taxes? 

Mr.  Murphy.  Absolutely. 

Commissioner  Ellis.  But  you  have  not  considered  the 
various  factors  of  the  problem? 

Mr.  Murphy.  We  have  considered  the  various  factors  of 
the  problem,  but  have  taken  no  action  upon  them.  You  see, 
we  are  a body  of  five. 

Commissioner  Swain.  Mr.  Murphy,  how  else  can  relief  be 
afforded  except  by  increasing  fares? 

Mr.  Murphy.  Of  course  you  are  asking  a question  that  I 
would  have  to  answer  personally.  I do  not  like  to  express  a 
personal  opinion;  and  I might  say,  without  expressing  any 
opinion,  that  there  are  quite  a number  of  phases  of  the  ques- 
tion that  might  be  considered.  I think  those  various  phases 
of  the  question  have  been  laid  before  this  committee  by  other 
representatives  of  public  bodies  and  private  citizens. 

Commissioner  Allen.  Then,  there  has  been  no  vote  of 
your  Commission  on  any  plan,  other  than  to  oppose  any  plan 
that  would  increase  the  taxes? 

j\Ir.  ]\IuRPHY.  I gathered  the  impression,  from  the  way 
the  Commission  discussed  it,  that  they  are  not  experts  on  the 
question  of  railroading.  I am  just  giving  you  an  idea  of  the 
way  they  discussed  it;  that  there  are  certain  phases  of  the 
question  that  should  be  settled  by  people  like  yourselves, 
who  have  had  ex])erience  in  matters  of  that  kind,  with  the 
assistance  of  railroad  experts.  That  if  the  problem  cannot 
be  settled  by  some  of  the  suggestions  that  have  been  put 
before  the  committee  — I think  this  is  rather  a ])ersonal  ex- 
pression of  ()])inion  to  the  committee  — I rather  think  the 
raising  of  the  fares  would  be  the  last  resort,  and  under  no 
circumstances  should  they  increase  the  taxes. 


1917.] 


HOUSE  — No.  1875. 


341 


Senator  Bates.  Mr.  Murphy,  the  plan  that  has  been  sug- 
gested here  is  about  as  follows:  That  the  franchise  tax  of 
approximately  one-half  million  dollars,  which  the  city  now 
receives  a share  of,  shall  be  remitted  the  company  tem- 
porarily, with  a contract  that  the  company  should  repay  it  at 
the  expiration  of  a certain  time;  that  in  that  interim  the  city 
will  be  without  its  share  of  the  franchise  tax.  Therefore,  Mr. 
Sullivan  suggested  that  the  statutory  tax  limit  might  have  to 
be  raised  to  enable  the  city  to  raise  that  amount  of  money  by 
general  taxation.  Now,  what  would  be  your  attitude  if  you 
knew  that  was  simply  to  be  a loan  to  the  Elevated  and 
should  be  repaid  to  you  later  on? 

Mr.  Murphy.  There  again,  my  hands  are  tied.  I come 
here  representing  the  Finance  Commission,  and  what  I am 
instructed  to  say  is  what  I have  said. 

Senator  Bates.  Would  you  also  oppose  making  up  that 
deficit  by  a bond  issue  on  the  part  of  the  city? 

Mr.  Murphy.  As  I said,  I am  not  here  in  an  individual 
capacity.  I can  only  say  what  I have  been  instructed  to  say, 
and  with  the  proviso  that  the  Commission  would  like  to  ex- 
press their  views  in  a written  report  to  this  committee.  I 
would  be  perfectly  willing  to  express  my  opinions  if  I could. 
I have  never  gone  behind  the  door  on  any  public  question; 
but  I am  here  on  instructions,  and  I make  the  statement  as  I 
was  instructed  to  make  it. 

Commissioner  Eastman.  Mr.  Murphy,  the  argument  has 
been  made  here  that  through  the  extension  of  rapid  transit 
facilities  the  real  estate  holders  of  the  city  gain  certain  bene- 
fits as  well  as  the  traveling  public. 

Mr.  Murphy.  Not  in  Boston.  I now  speak  individually. 
Not  in  Boston.  I doubt  it  very  much. 

Commissioner  Eastman.  Of  course,  the  plan  — 

Mr.  Murphy.  I live  in  Charlestown,  you  know,  and  I 
know  whereof  I speak. 

Commissioner  Eastman.  I realize  the  situation  there. 

Mr.  Murphy.  Yes.  I know  the  situation  there  to  my 
cost,  and  so  does  every  citizen  of  the  town. 

Commissioner  Eastman.  The  plan  which  the  company 
proposes  involves  a remission  of  the  tax  from  all  the  com- 


342 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


munities  in  the  metropolitan  district  which  are  now  served 
by  the  company’s  system,  and  in  certain  districts,  if  not  in 
Boston,  rapid  transit  has  added  greatly  to  the  real  estate. 
Under  those  circumstances  do  you  think  it  is  fair  that  any 
part  of  the  cost  of  that  system  should  be  assessed  upon  real 
estate  holders? 

Mr.  Murphy.  I do  not;  not  under  the  instructions  I 
have  got.  I do  not.  I am  speaking  individually  as  well  as  a 
representative  of  the  Board. 

Commissioner  Eastman.  What  were  the  reasons  that  your 
Commission  discussed  this  matter? 

Mr.  Murphy.  The  two  phases  of  the  question  that 
seemed  to  appeal  to  them  stronger  than  any  other  were  that 
it  w^as  an  innovation  and  it  is  practically  a subsidizing. 

Commissioner  Quincy.  Mr.  Murphy,  if  the  situation  were 
found  to  be  such  that  either  all  the  extensions  of  the  present 
rapid  transit  system  must  come  to  a stop  at  a definite  time, 
or  that’  some  form  of  public  assistance  in  the  way  of  remis- 
sion of  taxes,  which  "would  mean  more  taxes  on  the  remaining 
real  estate,  should  be  allowed,  would  your  position  take  you 
as  far  as  to  say  that  all  extensions  of  the  system  had  better 
stop  rather  than  to  have  any  additional  tax  on  real  estate  in 
the  city  of  Boston? 

Mr.  Murphy.  I think  so.  I think  if  you  establish  a 
policy  of  that  kind,  there  is  no  reason  why  every  railroad  in 
the  country  cannot  come  in  under  the  same  conditions.  You 
have  other  railroads  coming  into  Boston.  I think  you  have 
the  Bay  State  Road  coming  in;  you  have  steam  railroads. 
New  England’s  existence  depends,  to  a certain  extent,  so  we 
are  told,  on  the  Boston  & Maine  and  New  York,  New  Haven 
& Hartford,  and  upon  that  principle  there  is  nothing  to  pre- 
vent the  argument  being  advanced  that  if  transit  and  every 
thing  else  is  going  to  stop  throughout  New  England  then  you 
ought  to  subsidize  those  roads. 

Commissioner  Quincy.  You  don’t  know  of  any  other 
publicly  owned  subways  or  tunnels? 

Mr.  Murphy.  I have  heard  that  there  are  some  subways 
in  New  York. 

Commissioner  Quincy.  Not  in  New  England. 


1917.] 


HOUSE  — No.  1875. 


343 


Mr.  Murphy.  Not  in  New  England. 

Senator  Bates.  The  city  joins  in  with  the  railroad  in 
building  the  New  York  subways? 

Mr.  Murphy.  Apparently  so,  a majority  of  the  citizens 
felt  to  their  sorrow,  in  the  city  of  New  York.  If  I remember 
right  the  people  did  not  endorse  that  act.  That  is  my  recol- 
lection. 

Commissioner  Quincy.  But,  as  a matter  of  fact,  isn’t 
there  a large  burden  now  imposed  and  in  the  process  of  being 
imposed  year  by  year  upon  the  real  estate  owners  of  New 
York  to  help  pay  for  additional  rapid  transit  facilities? 

Mr.  Murphy.  I should  imagine,  speaking  in  a general  way 
of  the  New  York  situation  — I am  not  familiar  with  the 
details  — I have  no  hesitancy  in  saying  that  apparently  the 
people  of  New  York  did  not  endorse  the  action  of  the  authori- 
ties who  made  the  present  conditions  under  which  rapid 
transit  has  been  carried  out  in  New  York  city. 

Commissioner  Macleod.  Did  your  Commission  consider 
at  all  the  suggestion  made  by  the  company  that  the  Cam- 
bridge subway  should  be  taken  over  by  the  State  or  some 
public  authority? 

Mr.  Murphy.  They  did  consider  it.  They  took  no  vote 
on  it,  but  they  did  consider  it.  I think  they  considered  the 
question  of  taking  cars  off  the  surface  where  they  did  not 
pay,  and  questions  of  that  kind,  as  the  first  step  toward 
helping  the  road.  I think  they  took  up  those  various  propo- 
sitions with  that  idea,  but  they  came  to  no  conclusion. 
There  was  no  distinctive  vote  taken  on  those  phases  of  the 
question.  I am  inclined  to  think  that  the  tendency  of  the 
Commission  was  the  successful  working  out  of  a problem 
along  those  lines  as  the  first  step;  and  the  second  step  would 
be  the  question  of  raising  — 

Another  p/oposition  which  they  discussed  was  the  question 
of  carrying  people  15  or  10  miles  on  transfer  checks  and 
things  of  that  kind,  whether  or  not  the  transfer  system  was 
not  capable  of  being  remodeled,  with  possibilities  of  economy 
that  way.  They  took  up  all  those  phases  of  the  question,  but 
took  no  vote  on  those  particular  phases. 

And  then  they  took  up  the  question  of  raising  fares  after 


344 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


that.  I am  rather  inclined  to  think  that  the  first  steps 
would  be  economy,  and  if  those  failed,  raising  the  fares,  but 
the  last  step  — possibly  they  might  change  their  minds  — 
but  the  last  step,  namely,  the  taxing  of  the  citizens  of  Bos- 
ton, — we  are  opposed  to  that. 

Commissioner  Macleod.  With  reference  to  the  changing 
over  of  the  Cambridge  subw^ay  — 

Mr.  Murphy.  I believe  they  figured  out  that  there  would 
be  a saving  of  approximately  — I am  reminded  by  one  of  my 
confreres  here  that  while  we  did  take  up  those  questions  and 
take  no  action  upon  them,  the  probable  reason  why  the 
Finance  Commission  took  no  action  upon  those  questions 
was  they  thought  it  was  of  such  technical  nature  that  it 
required  expert  people  to  pass  upon  them. 

Commissioner  Macleod.  In  connection  with  the  question 
that  the  Cambridge  subway  should  be  taken  over  by  public 
authority,  to  some  extent  the  general  question  of  the  control 
of  subways  has  come  under  consideration  by  the  Commission, 
and  the  suggestion  has  been  made  that  it  might  be  desirable 
if  the  Cambridge  subw^ay  was  taken  over,  to  have  it  taken 
over  by  a metropolitan  tribunal  of  some  kind,  which  would 
also  take  over  the  existing  subways  in  the  city  of  Boston, 
and  have  all  the  subways  in  the  metropolitan  district  under 
the  ownership  and  control  of  that  particular  district  rather 
than  under  the  control  of  a separate  municipality;  and  that 
is  a suggestion  which,  perhaps,  is  not  immediately  raised  by 
any  of  the  suggestions  offered  in  the  Boston  Elevated’s  plan, 
but  it  is  corroborative  of  one  of  those  ideas  which  has  been 
suggested  here,  and  wLich  may  have  rather  an  important 
local  bearing  with  respect  to  the  situation  in  the  city  of 
Boston,  and  if  your  Commission  desires  to  submit  its  views 
in  writing,  I think  possibly  it  might  be  desirable  for  you  to 
give  some  consideration  to  that  ])articular  matter. 

Mr.  Murphy.  I understand.  I just  want  to  say  one  more 
word,  ajid  it  is  this:  That  I don’t  think  the  Finance  Com- 
mission wants  to  be  understood  as  o])posing  any  methods 
that  may  be  devised  toward  4naintaining  a })roper  service, 
provided  it  is  not  a method  that  puts  the  burden  upon  the 
ttixpayers  of  the  city  of  Boston,  — that  is,  by  increasing  the 
taxes. 


1917.] 


HOUSE  — No.  1875. 


345 


Commissioner  Eastman.  Did  you  consider,  Mr.  Murphy, 
the  question  of  paving,  and  the  burden  imposed  upon  the 
company  relative  to  the  paving  of  the  city  streets? 

Mr.  Murphy.  That  is  a new  phase  of  the  question  that  I 
would  not  like  to  express  an  opinion  on,  because  one  of  the 
crying  evils  in  Boston  to-day,  and  one  of  the  reasons  why  we 
cannot  have  any  more  taxes,  is  the  demands  that  are  made 
upon  the  city  of  Boston.  For  example,  you  are  going  to  pass 
a law,  probably,  to  give  the  policemen  one  day  in  eight. 
That  means  a couple  of  hundred  thousand  dollars.  I say 
that  is  going  to  be  passed,  because  the  Legislature  last  year 
passed  it,  and  the  Governor  suggested  that  if  it  came  from 
the  cily  of  Boston  he  would  have  had  no  objection.  We  have 
another  proposition  on  the  part  of  the  firemen,  that  they  get 
one  day  in  three,  or  two  platoons,  which  means  twelve  hours 
a day.  If  either  one  of  those  propositions  goes  through,  — 
if  the  one  day  in  three  goes  through,  it  will  mean  S300,000. 
If  the  two  platoons  go  through,  it  will  mean  S700,000,  or 
$800,000.  But  the  crying  evil  of  all  is  the  condition  of  the 
streets  of  Boston,  and  that  means  we  have  got  to  spend  in 
the  next  five  years  $2,000,000,  besides  the  regular  appropria- 
tions to  put  the  streets  in  anything  like  a presentable  con- 
dition; and  if  that  $2,000,000  is  spent,  it  has  got  to  have  in 
addition  many  hundreds  of  thousands  of  dollars  spent  each 
year  by  the  corporations,  and  with  their  aid  and  assistance 
to  put  the  streets  where  they  belong.  When  you  ask  that 
question  you  open  up  a question  on  one  of  the  biggest  prob- 
lems that  we  have  got  to  solve. 

Commissioner  Eastman.  I was  wondering  whether  you 
had  considered  it. 

Mr.  Murphy.  We  have  not  considered  it  at  all.  That  was 
not  considered. 

Representative  Newuiall.  Mr.  Murphy,  can  you  tell  us 
wliy  the  city  of  Boston  should  repave  the  streets  and  not  be 
paved  in  any  other  place?  If  the  policy  is  good  here,  why 
shouldn’t  the  Bay  State  do  the  same  thing? 

Mr.  Murphy.  As  I say,  I am  not  talking  here  as  an  indi- 
vidual, but  representing  the  Commission  that  I am  a member 


346 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


of,  and  do  not  want  to  express  an  opinion.  Individually,  I 
would  be  tickled  to  death  to  say  something  on  that. 

Representative  Newhall.  Llaven’t  you  taken  a stand 
that  the  Elevated  could  do  away  with  their  non-paying  lines? 

]\Ir.  Murphy.  We  have  not  taken  any  stand.  That  is  one 
of  the  questions  that  was  discussed,  and  we  took  no  action, 
but  decided  that  was  more  of  a proposition  for  this  Commis- 
sion, because  you  are  experts.  In  other  words,  the  railroad 
will  come  here  with  a proposition  along  that  line,  and  why 
not  the  Boston  Elevated  Road,  through  its  experts,  make  a 
proposition  along  that  line. 

Representative  Newhall.  But  you  would  approve  of  an 
increase  in  fare? 

Mr.  Murphy.  No;  we  took  no  vote  on  it. 

Representative  Newhall.  Before  you  would  approve  of  a 
proposition  for  an  increase  in  your  taxes? 

Mr.  Murphy.  I cannot  say  for  a certainty.  I was  merely 
instructed  to  say  they  were  opposed  to  that. 

Representative  Newhiall.  If  you  knew  that  the  rapid 
transit  extensions  in  the  city  of  Boston  had  to  stop,  if  some- 
thing is  not  done? 

Mr.  Murphy.  We  would  just  as  soon  expect  to  see  the 
world  stop  going  around  as  to  expect  the  proposition  which 
you  make. 

Representative  Newhall.  Somebody  has  got  to  pay  the 
bills. 

Mr.  Murphy.  That  is  all  right.  I have  nothing  to  say. 
You  put  down  a proposition  that  I do  not  think  is  possible. 

Commissioner  Macleod.  Within  what  time,  Mr.  Murphy, 
do  you  think  you  could  submit  your  views  in  writing? 

Mr.  jMurphy.  If  the  Commission  should  so  decide,  we 
could  easily  give  it  to  you  inside  of  a week.  Would  that  be 
too  long? 

Commissioner  Macleod.  I think  that  would  be  satisfac- 
tory. 

Mr.  Murphy.  Tlie  suggestion  is  ma<le  by  the  Finance 
Commission  that  if  there  is  any  other  particular  question  — 
what  we  are  really  liere  for  is  to  hel])  out  in  any  way  we  can, 
and  to  work  in  any  way  we  can,  and  to  furnish  any  informa- 


1917.] 


HOUSE  — No.  1875. 


347 


tion  that  we  can  to  this  body,  and  if  there  is  any  other 
phase  of  the  question  that  you  would  like  to  have  the 
Finance  Commission  look  into,  we  shall  be  very  glad  to  do  it 
and  submit  the  results  of  our  work  to  the  committee. 

Commissioner  Macleod.  It  seems  to  me  that  if  your 
Commission  desires  to  consider  some  of  these  major  alterna- 
tives that  have  been  suggested,  with  a view  to  some  discus- 
sion as  to  the  propriety  of  one  form  of  relief  in  preference  to 
another,  that  we  might  like  to  have  something  along  that 
line.  For  instance,  a suggestion  has  already  been  made  as  to 
whether  any  remission  of  tax  would  be  feasible,  even  though 
it  meant  an  increase  in  existing  fares,  or  an  abandonment  for 
the  present  of  any  program  of  further  extensions  of  the  rapid 
transit  system.  There  are  those  who  appeared  before  this 
Commission  who  have  stated  that  the  possibility  is  not  re- 
mote that  one  of  these  alternatives  is  likely  to  confront  the 
public  of  this  city,  and  in  this  metropolitan  district,  and 
while  it  is  perhaps  not  reasonable  to  expect  your  Commission 
to'deal  very  much  with  hypotheses  before  the  facts  have  been 
established,  yet,  if  you  should  care  to  deal  with  those  hy- 
potheses, I think  it  might  be  of  some  advantage,  to  this 
Commission. 

Commissioner  Eastman.  Mr.  Murphy,  at  the  other  hear- 
ings there  was  sonje  difference  of  opinion  between  Mr. 
Matthews  and  Mr.  Sullivan,  the  corporation  counsel,  as  to 
the  burden  which  the  present  subways  have  imposed  on  the 
city  of  Boston.  Has  your  Commission  given  any  study  to 
that? 

Mr.  Murphy.  We  have.  We  have  figured  it  out.  We 
have  the  figures,  but  I was  not  authorized  to  make  any 
statement  on  the  subject  here  to-day.  We  have  gone  into 
figures,  and  we  think  we  have  got  the  correct  figures. 

Commissioner  Eastman.  I suppose  you  can  supply  those? 

Mr.  Murphy.  We  shall  be  very  glad  to  supply  those 
figures  in  the  report  that  we  will  send  in  here. 

Commissioner  Macleod.  We  are  very  much  obliged  to 
you  for  coming.  Mr.  McDonald,  is  there  anything  further 
that  you  desire  to  offer? 


348 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


Mr.  W.  J.  McDonald. 

Mr.  Chairman  and  gentlemen,  I have  a few  facts  that  I 
would  like  to  tell  you  about.  It  will  only  take  a few  minutes. 
Of  course,  one  of  the  important  matters  to  be  considered, 
outside  of  the  relief  of  the  financial  condition  of  the  Elevated, 
is  the  future  development  of  the  city  of  Boston.  That  is  a 
matter  that  I am  very  much  interested  in.  Now,  any  plan 
that  does  not  provide  for  the  proper  development,  is  going 
to  be  a serious  handicap  to  the  city.  Our  experience  in  the 
past  has  been  that  the  Boston  Elevated  have  refused  to 
accept  a subway  until  they  were  practically  ready  for  it,  and 
in  that  way  it  has  held  back  the  development  of  the  city  in 
the  last  fifteen  years,  their  excuse  being  that  their  financial 
condition  would  not  allow  them  to  take  on  additional  bur- 
dens. Now,  the  Elevated  structures  were  constructed  some- 
where around  twenty  years  ago  at  a serious  damage  to  the 
city  of  Boston,  serious  in  a great  many  ways;  that  is, 
particularly  to  the  property  abutting  along  the  streets  where 
they  were  constructed.  The  damage  to  Charlestown  alone, 
on  account  of  that  construction  which  is  entirely  for  the 
benefit  of  the  surrounding  towns,  — Everett,  ^Malden, 
Melrose,  Wakefield  and  towns  that  side  of  B-oston,  — it  is 
entirely  for  their  benefit  or  the  people  living  there  instead  of 
the  people  living  in  Charlestown.  Now,  the  results  are  that 
Charlestown  has  suffered  many  millions  of  loss  on  account 
of  that  construction. 

The  Legislature  last  year  passed  an  act  for  the  removal  of 
that  structure  and  the  construction  of  a subway  in  substitu- 
tion. Of  course,  it  is  subject  to  acceptance  by  the  Boston 
Elevated,  which,  in  their  present  financial  condition,  is  not  to 
be  considered  in  any  way. 

Now,  it  is  the  same  way  with  Washington  Street.  The 
values  on  Washington  Street  have  dei)reciated  more  than  70 
])er  cent  in  many  instances  in  twenty  years;  a great  many 
cases  of  40  and  50  and  GO  per  cent. 

Ckmimissioner  Allex.  You  mean  along  where  the  Ele- 
vated structure  is? 

Mr.  ]\lcl)0NAjm.  Yes,  sir,  along  the  entire  length  of 


1917.] 


HOUSE  — No.  1875. 


349 


Washington  Street.  Properties  up  there  that  cost  in  the 
vicinity  of  $200,000  have  been  sold  for  less  than  $75,000,  to 
my  personal  knowledge,  and  a great  many  of  them  on  that 
same  basis. 

Now,  what  we  want  is  a provision  for  the  future.  We  need 
subways  now.  We  should  have  a complete  subway  system 
laid  out  here  and  it  should  have  been  laid  out  years  ago;  but 
all  the  sub^vays  that  have  been  constructed,  have  been  con- 
structed with  this  in  view,  — that  there  was  an  appropriation 
made  for  a certain  subway,  and  that  subway  was  con- 
structed not  knowing  that  they  were  ever  going  to  build  an- 
other one;  and  that  has  been  a serious  handicap  to  the  city. 

The  city  of  Boston  has  been  growing  very  rapidly,  and,  of 
course,  the  suburban  districts  have  been  growing  tremen- 
dously. Inside  of  a few  years  the  population  of  Greater  Bos- 
ton will  be  over  3,000,000,  according  to  the  growth  in  the 
last  twenty  years.  There  is  no  provision  made  for  them  at 
all.  It  is  something  that  we  should  have  had  years  ago,  and 
it  is  a serious  handicap;  and  there  is  no  real  reason  for  it 
except  to  get  the  people*  to  join  on  one  decided  improvement 
and  make  it;  but  one  wants  an  improvement  in  one  place 
and  some  one  else  wants  it  somewhere  else,  and  they  are  all, 
afraid  that  it  is  going  to  cost  them  something,  and  they 
want  the  other  fellow  to  pay  for  it.  If  you  are  going  to 
place  any  burdens  on  the  real  estate,  it  is  going  to  be  a 
handicap  to  the  city,  and  a serious  matter.  Many  of  you 
gentlemen  think  that  the  large  buildings  down  town  are 
paying  large  incomes  and  can  afford  additional  taxes.  That 
is  not  true  in  hardly  any  one  case.  Now,  one  building  that 
I am  interested  in,  that  was  built  about  thirty  years  ago, 
one  of  the  best  buildings  in  the  city,  it  cost  nearly  $1,700,000 
to  build,  including  the  land;  that  is  at  95  Milk  Street. 
The  present  income  that  we  are  getting  out  of  that  build- 
ing to-day  is  about  $70,000.  Now,  we  pay  the  city  of  Boston 
$21,000  out  of  that  for  taxes,  which  leaves  us  less  than  $50,000 
to  pay  for  the  investment  and  to  pay  all  the  running  expenses, 
and  you  can  see  what  is  left.  It  does  not  pay  2 i)er  cent  on 
the  original  cost.  Now,  if  you  add  another  burden  on  proj)- 
erty  of  that  kind  you  will  handicap  us  and  it  will  cost  more 


350 


BOSTON  ELEVATED  RAILWAY. 


[Mar. 


to  Boston.  There  are  hundreds  of  properties  in  the  city  in 
the  same  position. 

Now,  I think  this  • additional  burden  should  be  placed 
directly  upon  the  people  that  patronize  the  road,  without  any 
question.  As  near  as  I can  guess  — it  is  purely  a guess  — 
not  more  than  one-third  of  the  patrons  of  the  subway  or  the 
Elevated  system  live  in  Boston.  That  is  purely  a guess. 
There  is  no  way  of  telling  about  it.  I inquired  of  the  Ele- 
vated officials,  and  they  said  they  cjould  not  tell  me  anything 
further  than  that;  but  I am  judging  of  the  population  and  so 
many  people  who  live  in  the  heart  of  Boston  who  do  not  use 
the  service  at  all.  I think  that  is  a conservative  estimate, 
that  66  per  cent  of  the  people  who  patrbnize  the  Elevated 
Railroad  live  outside  of  Boston,  get  their  living  here  and  do 
not  pay  one  cent  toward  their  expense  here  in  the  city.  For 
that  reason  they  are  exempt  entirely  on  any  additional  bur- 
den placed  on  the  taxpayers  to  provide  for  those  subways. 

Commissioner  Macleod.  That  does  not  .follow.  That  is 
not  entirely  correct,  if  I understood  your  statement,  because 
the  plan  presented  provides  for  a remission  of  taxes  in  part 
from  all  the  municipalities  served  by  the  Boston  Elevated 
Company.  It  is  not  a plan  for  making  the  city  of  Boston 
contribute  the  entire  amount  of  the  remission. 

Mr.  McDo'NALD.  No,  but  I understood  there  was  a plan 
being  considered  to  relieve  the  Elevated  of  the  rental  of  the 
subways  and  placing  it  back  on  the  city  of  Boston.  Of 
course,  most  of  the  subways  are  in  the  city  of  Boston;  but 
I am  speaking  more  particularly  about  the  future  subways, 
the  subways  that  we  need  here  in  the  city  of  Boston.  The 
city  of  Boston  cannot  be  compared  with  any  other  city  in  the 
country.  With  the  narrow  streets  and  congestion  every- 
where, there  is  no  other  way  of  providing  suitable  transporta- 
tion except  underneath.  For  that  very  reason  there  should 
be  a definite  plan  made  now,  and  sufficient  money  from  some 
source  or  another  to  provide  for  that,  without  every  time 
that  any  improvement  is  considered  that  the  Elevated  will 
have  to  be  considered  and  really  forced  uj)on  them  before 
they  will  accei)t  it,  with  a delay  of  several  years,  which 
causes  a serious  handicap  to  the  development  of  the  city. 


1917.] 


HOUSE  — No.  1875. 


351 


Now,  if  the  present  Elevated  structures  were  removed  it 
would  be  a tremendous  benefit  to  the  entire  city.  I think 
the  reduction  in  the  assessed  values  has  been  something  like 
— I looked  it  up  some  few  years  ago  — but  I think  it  is 
somewhere  around  $15,000,000,  directly  and  indirectly 
along  the  Elevated  lines,  so  that  the  city  has  lost  tremen- 
dously by  the  Elevated  structures  which,  if  they  were  removed 
and  subways  provided,  the  city  of  Boston  would  be  benefited 
materially. 

W.e  are  now  taking  on  the  vacant  land  of  the  New  Haven 
Road  and  Technology  down  through  Park  Square  district. 
Now,  there  is  no  direct  connection  with  Columbus  Avenue  — 
there  is  no  direct  connection  with  this  property  through  there 
at  all.  There  is  no  connection,  which  has  been  considered 
for  a great  many  years  — a subway  connecting  through  to 
Park  Square,  connecting  the  heart  of  the  city.  Nearly  every- 
thing enters  at  Park  Street.  Now,  those  are  improvements 
that  should  be  carried  out.  The  benefit  to  the  city  will  be 
an  increase  in  new  construction,  which  is  now  v^^cant  land, 
in  the  next  three  or  four  years,  to  at  least  $10,000,000  or 
$15,000,000,  so  that  the  subway  construction  is  a direct 
benefit  to  the  city.  Of  course,  there  will  be  an  increase  in 
assessments  wherever  the  stations  are  located,  and  there  will 
be  a slight  increase,  perhaps,  wherever  changes  are  made; 
but  if  a one-cent  fare  could  be  provided,  that  would  dis- 
tribute the  burden  upon  the  people  that  use  the  road,  which 
would  not  be  any  burden  to  them  in  the  saving  of  time. 

Now,  I live  in  Allston,  and  since  the  subway  has  been 
constructed  our  running  time  has  been  twelve  minutes,  and 
from  there  up  to  fifteen  minutes,  whereas,  before  the  subway 
was  cpnstructed  up  Boylston  Street,  our  running  time  was 
thirty  minutes,  so  that  the  saving  morning  and  night  is 
thirty  minutes  a day.  That  is  worth  more  than  two  cents. 
A great  deal  of  tim^e  can  be  saved  by  future  subways.  Of 
course,  the  subway  system  has  just  started.  There  ought  to 
be  $50,000,000  spent  on  sul)ways  in  the  next  ten  years;  that 
is,  at  least  that  amount. 

New  York  City  is  now  spending  $300,000,000,  and  I 
understand,  of  course,  that  the  transportation  comi)anies 


352 


BOSTON  ELEVATED  kAILWAY. 


[Mar. 


there  do  not  pay  any  rental  for  the  first  seventeen  years. 
Now,  there  is  no  provision  beyond  that,  I understand.  Of 
course,  that  burden  comes  directly  upon  the  taxpayers  of  the 
oity.  Perhaps,  they  may  be  able  to  stand  it  there  in  New 
York,  but  here  in  Boston  it  is  an  entirely  different  matter. 
New  York  is  all  New  York,  and  Boston  is  Boston,  and  the 
suburban  districts  are  entirely  separate  in  every  way.  If 
it  was  Greater  Boston  the  taxes  might  be,  in  that  respect, 
fair  and  equitable  to  all,  but  Boston  providing  subways  for 
the  suburban  districts,  it  is  not  fair  to  impose  all  the  burdens 
here. 

Commissioner  Macleod.  This  plan  that  has  been  sug- 
gested, as  I already  said,  does  not  mean  either  the  present  or 
future  subways  constructed  in  the  city  of  Boston  to  be 
compensated  for  entirely  by  a remission  of  tax  from  the 
municipality  of  Boston  alone,  but  to  come  through  the 
medium  of  the  remission  of  the  corporation  tax,  which  now 
goes  into  the  treasury  of  the  separate  municipalities  within 
the  metropolitan  district,  apportioned  on  the  track  mileage. 

INIr.  McDonald.  That  is  true,  but  the  burden  directly 
falls  right  back  upon  the  real  estate,  whether  it  is  in  Boston 
or  not,  and  the  majority  of  it  is  in  Boston;  and  the  real 
estate  pays  about  four-fifths,  I understand,  of  the  taxes  paid 
into  the  Commonwealth,  and  therefore  the  burden  would 
really  fall  right  back  on  the  real  estate,  and  they  are  over- 
burdened now,  not  only  in  Boston,  but  in  other  districts, 
where  needed  improvements  in  the  streets  and  other  ways  arc 
very  pressing. 

If  an  additional  fare  of  1 cent  was  established  it  would 
give  $3,675,000  a year,  and  with  the  future  growth  in  the 
next  ten  years  it  would  add  up  to  $5,000,000  a year.  If  that 
was  paid  into  the  Transit  Commission’s  hands,  that  they 
would  have  the  control  of  it  for  the  use  of  the  subways  now 
constructed  and  to  be  constructed,  and  that  fund  would  care 
for  the  present  subways,  as  well  as  the  future  subways,  we 
would  have  the  right  sort  of  development  here  and  would  not 
im])ose  any  burden  upon  any  one  individual. 

As  far  as  the  Stiite  taking  over  the  (^imbridge  subway  is 
concerned,  it  may  be  all  right,  but  it  does  not  seem  quite 


1917.] 


HOUSE  — No.  1875. 


353 


right  that  the  people  in  Worcester  and  in  the  western  part 
of  the  State  should  own  the  subway  in  the  city  of  Cambridge 
for  the  benefit  of  the  people  who  l^ve  here.  It  is  purely  a 
local  matter.  This  money  will  provide  for  all  of  that,  take 
care  of  the  whole  business.  I do  not  think  there  would  be 
any  serious  objection  from  the  majority  of  the  people  if  they 
knew  the  facts  and  knew  that  the  money  was  going  directly 
to  the  Transit  Commission  to  be  spent  for  their  own  benefit. 
If  it  was  going  into  the  hands  of  the  Elevated  and  to  be  used 
for  their  benefit,  it  would  be  another  matter. 

The  Elevated  officials  have  stated  to  me  that  they  would 
be  perfectly  happy  and  satisfied  if  they  were  relieved  of  the 
present  subway  burdens,  and  they  could  take  care  of  the 
business  in  a much  better  way  than  it  is  taken  care  of  at  the 
present  time. 

Now,  that  is  what  we  are  interested  in,  to  have  the  de- 
velopment of  the  city  carried  on  in  a proper  way,  and  not  be 
stopped  and  blockaded  in  the  way  it  has  been  in  the  past. 

Commissioner  Macleod.  Your  idea  is  that  the  future 
subways  should  be  built  at  the  expense  of  the  car  riders? 

Mr.  McDonald.  Yes,  sir. 

Commissioner  Macleod.  And  not  the  property  owners? 

Mr.  McDonald.  Yes,  sir. 

Commissioner  Macleod.  And  at  the  end  of  a certain 
period  the  car  riders  should  present  to  the  city  of  Boston 
840,000,000  or  $50,000,000  worth  of  subways,  the  rental 
from  which  should  be  available  for  the  remission  of  taxes, 
which  would  otherwise  accrue  on  real  estate. 

Mr.  McDonald.  I think  that  would  be  probably  the  final 
result,  yes,  sir.  Instead  of  having  a burden  of  many  millions 
of  dollars  piled  up  against  the  city  of  Boston  as  a public 
debt  for  these  subways,  that  they  will  be  paying  their  own 
way.  That  will  be  a burden  that  the  taxpayers  will  be  re- 
lieved from.  It  is  not  only  the  tax])ayers  that  will  be  bene- 
fited, but  everybody  who  rides  on  the  road  will  be  benefited. 
The  great  saving  of  time  is  the  principal  thing  to  be  con- 
sidered. 

I don’t  know  that  I have  anything  else  to  say,  Mr.  Chair- 
man, unless  there  is  some  question  that  you  would  like  to 
ask  me. 


354 


BOSTON  ELEVATED  RAILWAY.  [:\Iar.  1917. 


Commissioner  Macleod.  Any  other  questions?  [No  re- 
sponse.] We  are  much  obliged  to  you. 

If  there  is  no  one  else  on  the  part  of  the  public  who  wishes 
to  say  anything,  the  Board  at  this  time  will  go  into  executive 
session. 


The  Commission  thereupon  went  into  executive  session. 


